Bloomberg reports that the COVID-19 pandemic has “devastated” the diamond industry, leaving the top five producers with a combined $3.5 billion in unsold inventory.
The coronavirus hit the business from several angles. Jewelry stores were largely closed. Cutting and polishing professionals in India were unable to go to work. De Beers canceled a March sale because would-be buyers were unable to travel to see the diamonds.
Now De Beers, Alrosa and other major producers need to get rid of the excess inventory. De Beers and Alrosa have been reluctant to slash prices and have instead cut bac on production and have been liberal in allowing buys to back out of contracts.
Still, Bloomberg reports that excess diamonds could total $4.5 billion by the end of 2020.
“The question will be, how does this destocking occur? Can miners destock and keep protecting the market?” Anish Aggarwal, partner at Gemdax, was quoted saying.
Some smaller diamond companies have been much more willing to reduce prices, Bloomberg reports.
Aggarwal told the news outlet that it’s “hard to speculate on what the recovery curve will look like.” But consumer demand, he said, is not likely to spring back quickly.
Read more at Bloomberg