The R&M “Lettre”

These five themes are defining the diamond market this year, and likely beyond.

The diamond industry is in its healthiest state in over a decade, but it will need to be proactive if it wants to maintain that progress.

Factors such as US fiscal policy and Chinese jewelry demand are boosting the market for now, but inflation and other complications are on the horizon.

 The rough market is buoyant after yet another price increase by De Beers, leaving many in the trade scratching their heads. Goods are selling at strong premiums on the secondary market — double-digit percentages in some categories — as manufacturers continue to boost production after the past year’s coronavirus-induced stoppages.

A few days after Lucara Diamond discovered yet another 1,000-plus ct. diamond at its Karowe mine (pictured) in Botswana, the company announced it has received 38 million Canadian dollars (about $30.9 million) in new funding.

Polished diamond prices are on a near year-long rally, rising more than 18% since last July when they hit a record low.

Diamond jewelry sales rose by about 30% in the last three months—February through May—versus 2019, according to the Natural Diamond Council (NDC).

Having improved its creditworthiness before and during the pandemic, the industry is learning to rely less on its lenders.

India is experiencing a shortage of diamonds as rough supply has dropped and polished goods remain stuck at the Gemological Institute of America (GIA).

The diamond industry is emerging from the Covid-19 crisis, says Rapaport Senior Analyst Avi Krawitz, who has identified five trends shaping the market in 2021.

Global luxury sales could return to pre-pandemic levels this year, boosted by a strong recovery in China and an unexpected early rebound in the US, according to Bain & Company.

The diamond market can return to normalcy after its impressive growth at the beginning of the year thanks to strong jewelry sales, rising profit margins for cutters and a shortage of rough diamonds. Midstream margins have decreased as the diamond prices continue to rise suggesting that the market is overheated.