Long term customers also benefit from long term contracts. As a result total rough diamond output in 01 as measured by carats increased by a modest to 1 million carats see Figure. As the market has been liberalized and more producers have sold their Journey Diamond Heart output outside the Central Selling Organization new sales channels have emerged. The higher demand projection for rough diamonds assumes stronger GDP growth Journey Diamond Heart in developed economies a faster economic recovery and reinvigorated consumer confidence. Admission into the select company of long term buyers is not only prestigious though Journey Diamond Heart it can also help buyers qualify for working capital financing from diamond banks. At the same time other diamond Journey Diamond Heart hubs are moving into major consuming regions or capitalizing on their proximity to them. Rio Tinto for its part opted to retain its diamond assets after initially announcing plans to spin them off. They were sold under long term contracts to a select group of customers. Online exchanges. In our latest projection De Beers’s output Journey Diamond Heart is expected to increase at a lower rate than previously forecasted through 0 while Rio Tinto’s will grow at a slightly higher rate than we projected in 01. Regional manufacturing centers in transition China and India continue to power growth in diamond jewelry production with China surpassing India in production in 011. The sales take a variety of forms online timelimited auctions direct negotiations between buyers and sellers and take it or leave it offers at a fixed price. From 01 through 01 and then decline by a compound Journey Diamond Heart rate of 1. Auctions also enable producers to establish a market price for stones of exceptional size Journey Diamond Heart or quality. Middle market players Journey Diamond Heart for their part need to relocate at least a share of their cutting and polishing operations. Billion while Journey Diamond Heart retail sales of diamond jewelry grew 1. Overview of the cutting and polishing market contracted by in 01 squeezed by a slowdown in domestic demand and devaluation of the rupee. That’s still well below the precrisis peak output of 1 Journey Diamond Heart million carats in 00. Despite the persistent difficulties with valuation the absence of a spot market and the lack of a proven track record of success in the space new funds are emerging that offer ever new ways to invest in diamonds with the contribution ranging from 10 000 to 1 million and a diamond fund from Swiss Asset Advisors a recently announced fund that will offer flexibility to have the investments returned at any time. Global rough diamond demand forecast Methodology The demand forecast for Journey Diamond Heart rough diamonds hinges on consumer demand for diamond jewelry. To account for variations in diamond quality we used each mines’ average price per carat to project future supply in dollar terms see Figure. New sorting and polishing technologies have enabled producers to boost revenues. Compound annual rate Journey Diamond Heart from 01 through 0 compared with 1. We believe there is a moderate probability of Journey Diamond Heart any of these developments coming to pass. It turned out that 00 of the stones were synthetic and some according to one industry source had induced impurities that made them appear natural upon first inspection. Overall diamond reserves have held stable at approximately. Mumbai mostly handles the import export Journey Diamond Heart trade of India’s cutting and polishing sector. Reserves are classified as Journey Diamond Heart either probable or proven depending on the degree of geological and commercial confidence in their potential.
Diamond demand could accelerate if middle class affluence grows faster than Journey Diamond Heart the forecasted compound annual rate. And because auctions require fewer key account managers and other sales personnel they enable producers to control their selling costs. Because Journey Diamond Heart of subjective considerations the same diamond can receive markedly different grades from different laboratories with resulting differences in price. From 01 through 0 as existing mines are depleted and new mines add only limited production supplies will decrease in both volume and value terms. The approximate balance between additional reserves and annual production implies strongly that the overall production landscape will not markedly change in the near term. The remaining Harry Winston Diamond business was Journey Diamond Heart subsequently renamed Dominion Diamond. Rough diamond revenues Journey Diamond Heart declined 1 from 011 to 1. Overview of sales channels Like the upstream market for rough diamonds the middle market for both rough and polished diamonds has three primary sales channels long term contracts auctions and short Journey Diamond Heart term or onetime contracts. Over the longer term however auctions are likely to account for an increasing share of rough diamond sales as smaller producers claim a growing proportion of rough diamond production. They prefer the channel because they’re Journey Diamond Heart able to maximize their selling prices when the market for rough diamonds is strong. The Journey Diamond Heart name of the game for them will be to lock in access to primary sources of rough diamonds make their cutting and polishing operations cost competitive and secure financing for their operations. The combinations and permutations of those characteristics run into the thousands. Color clarity and cut Journey Diamond Heart are all to one degree or another a matter of subjective judgment. Additional factors include the adoption rate of Western consumption habits which would tend to increase the share of diamonds in consumers’ Journey Diamond Heart discretionary spending and the concerted push by growth minded retailers into second third and fourth tier cities as well as online channels.
The demand outlook also takes into consideration each country’s middle class growth rate historical preferences for diamond jewelry and the market penetration of diamond engagement rings. Going forward our 01 base demand forecast assumes that GDP will grow more slowly in China and India than projected in 01 and as a consequence the middle class in China and India will expand at a slower rate than projected in 01. Compound annual rate from 00 to 01 Journey Diamond Heart and growth in the European Union fell from 011. This deal was part of a wave of mergers and acquisitions M A that further concentrated mining activity among a handful of players. At the downstream end of the value chain requires retailers especially those at the high end of the market selling jewelry with high value diamonds to secure adequate supplies of large high quality stones. Sellers include dealers in polished diamonds as well as small cutting and polishing companies. As for sales channels the mix is likely to remain stable in the near term. We also provide an update on the outlook for the diamond Journey Diamond Heart industry through 0. With more spending power at their disposal some consumers will likely buy more expensive diamond pieces. Reserves divided by current production levels indicate the number of years that the current levels of production can be sustained. As a result of the new data and changed assumptions we now forecast that demand will grow to 1. Contracts Journey Diamond Heart with no fixed volume specify only the duration of the agreement. Their mining and exploration costs are rising while the governments of the countries where many of their mines are Journey Diamond Heart located are stepping up beneficiation requirements. Sales in the Persian Gulf grew by in 01 down from a compound annual growth rate from 00 through 01 compound growth rate and by in India down from a compound annual growth rate from 00 through 01. Several different diamond industry entities including Journey Diamond Heart the Antwerp World Diamond Centre and Ari Epstein the organization’s chief executive officer also contributed to this report. They prefer the channel because they’re able to maximize their selling prices when the market for rough diamonds long term contracts are relatively rare in the middle market accounting for only about of sales. The first step is the producer’s due diligence examination of the customer. Key takeaways The middle market Journey Diamond Heart segment of the diamond value chain includes secondary sales of rough diamonds by as measured in carats including a large share of lower priced diamonds from its inventories. For example New York the gateway to the world’s largest retail market has diminished its presence in the rough diamond market is expected to remain balanced from 01 through 01 demand from 01 through 0 is expected to exceed supply supporting a long term positive outlook for rough diamond producers. Ethical considerations appear to be of less concern to consumers in the rest of the world than forecasted in 01. At that point the diamond reaches Journey Diamond Heart the middle market stage where it’s cut polished and assembled into jewelry. Legitimately certified synthetics are laser inscribed with a unique identifying number and name. It takes skilled hands and eyes to assess Journey Diamond Heart the quality and value of individual diamonds and much of the work of cutting and polishing companies. Million carats in 01. In the US for its part New York continues to press its advantage as the gateway to the world’s largest cutting and polishing market. Is one retailer that Journey Diamond Heart has made such investments with mixed results. Mumbai mostly handles the import export trade of India’s Journey Diamond Heart cutting and polishing industry while technological innovation could potentially redistribute part of the production between polishing centers in the future. Upstream players which enjoy profit margins of 1 players at the cutting and polishing stage are also frequently involved in other activities along the value chain and able to gain additional margin from those activities. They must gauge the supply demand balance the availability of financing the mix of rough diamonds in their stocks the price information gleaned from auctions and the pricing trend further along the value chain see Figure. Recent Insights Journey Diamond Heart 1 01.
The country’s Journey Diamond Heart labor costs are high compared with those of China and India and its cutters lack expertise comparable to that of craftsmen in Europe Israel and the US. Diamond jewelry retail sales continued to grow in line with historical trends through 0. The Journey Diamond Heart middle market stage includes the secondary sales of rough diamonds by large cutters and polishers with direct access to rough diamonds. De Journey Diamond Heart Beers meanwhile remains highly profitable with a 01 operating margin of represented only a slight decline from 011’s margin and resulted in operating income of 1.
Of course the extraction technology has improved considerably and today more and more sorting and grading are done by machine. Larger players took the opportunity to consolidate their market positions by acquiring weaker competitors. In 01 about half of the polished diamonds used in Chow Tai Fook jewelry were produced in house. Billion in 01 although competitors such as ALROSA and Dominion Diamond are gradually catching up. They were sold under long term contracts or through auction see Figure. Most large producers sell less than 1 of their rough diamond output through this channel with the exception of ALROSA which sells about 0 of its output through short term agreements though ALROSA is increasing the number of long term contracts with three major rough diamond producers and acquiring two cutting and polishing operations. Key takeaways The diamond industry Journey Diamond Heart had mixed results in 01. No synthetics Journey Diamond Heart were detected during the trial of the equipment. The new diamond hubs of Dubai and Hong Kong are luring trade with zero taxes on imports and exports and Journey Diamond Heart by touting their proximity to the emerging cutting and polishing industry in China and India. The true level of Africa’s reserves and resources may be even higher than indicated because large sections of the continent Journey Diamond Heart that potentially hold diamonds remain unexplored. Billion while retail sales of diamond jewelry slowed in the key consumption regions of China and India the overall retail market continued its growth in 01 extending its recovery from the financial crisis see Figure. African countries account for most of the world’s diamond resources see Figure. Mumbai on the other hand has Journey Diamond Heart historically sold most of its production through long term contracts. The higher demand projection also assumes that stronger than expected Journey Diamond Heart GDP growth would accelerate the expansion of the middle class in China and India and speed the adoption of Western spending practices among those populations. It takes skilled hands and eyes to assess the quality and value of individual Journey Diamond Heart diamonds and much of the work of cutting and polishing still goes on in small family owned workshops where craftspeople apply a lifetime’s experience to transform dull and dirty stones into glittering gems. At the upstream segment sorting and valuation are in flux as producers Journey Diamond Heart relocate sorting centers to mining countries to meet beneficiation requirements. New player Dominion Diamond taking over from BHP Billiton by acquiring its stake in the Ekati mine has reported that it will make significant investments to develop new mines and exploit smaller and low grade deposits that BHP Billiton did not attempt to extract. Global rough diamond supply forecast Two alternative scenarios We constructed two alternative supply scenarios to allow for the possibilities that production will grow at a greater or lesser Journey Diamond Heart rate than that assumed in the base scenario. This development could slow growth in emerging markets such as China and India and its cutters lack expertise comparable to that of craftsmen in Europe Israel and the US. And with pricing uncertain and technology growing Journey Diamond Heart more complex producers are making operational excellence a priority. Traditional cutting centers Refocusing Traditional cutting centers in Belgium the US and Russia have reoriented their businesses to focus on highvalue stones and specialized services. Local cutters got a boost though when Hong Kong’s Chow Tai Fook the world’s largest vertically integrated jeweler signed a long term supply agreement with ALROSA to supplement earlier agreements with De Beers and Rio Tinto. In recent years however a number of sorting operations have been moved to diamond Journey Diamond Heart producing countries in compliance with beneficiation requirements. The gap between demand and supply will grow rapidly from 01 through 0 however implying higher prices at every stage of the value chain see Figure. The middle market is highly fragmented with more than 000 players competing at different activities. Middle Journey Diamond Heart market. Total jewelry production hit 1 billion in 01 of which some billion was Journey Diamond Heart diamond jewelry. Auction Journey Diamond Heart sites. The base scenario also takes into account the absence of significant new discoveries of diamond deposits in recent years. The country’s labor costs Journey Diamond Heart are high compared with those of China and India and speed the adoption of Western spending practices among those populations. With margins of approximately these smaller players are concentrated in the cutting and polishing segment. Several factors are behind the decline including falling marginal demand from the key diamond consuming countries of China and India the sluggish U. Diamonds from Zimbabwe and the Democratic Republic of Congo tend to be of lower quality than equal weight diamonds from other regions.
Alternative financing sources will require more transparency and there is already pressure for greater openness. Producers prepare anywhere Journey Diamond Heart from 0 to 1 0 varieties of boxes. The 01 forecast also assumes that GDP will grow more slowly in China and India than projected in 01 and as a consequence the middle class in China and India Journey Diamond Heart and speed the adoption of Western spending practices among those populations. With all these investments Dominion Diamond intends to extend the Ekati mine’s life until about 0. Global rough diamond supply forecast Two alternative scenarios We constructed two alternative supply scenarios to allow for the Journey Diamond Heart possibilities that production will grow at a greater or lesser rate than that assumed in the base supply scenario see Buy Now 120 Ct Princess Marquise Round Figure. So to forecast the demand for diamond jewelry this study uses GDP projections from the Economist Intelligence Unit which sees solid growth prospects in the US and Europe and slightly positive growth in Japan see Figure. ALROSA and De Beers remain the most profitable producers both Journey Diamond Heart in absolute value and per carat. Readers seeking a quick overview of the report’s conclusions will find a summary of key takeaways at the end of the chapters. China and India the dynamos of the diamond market’s Journey Diamond Heart growth in recent years continue to grow but 18K White Gold the pace of their growth has slowed. After examination customers enter into price negotiations with sellers and when a price is agreed the parcel changes hands. Japan’s growth fell to in 01 after growing at a compound annual rate of. The value chain’s three stages Before a diamond reaches the young couple buying a ring to mark their Journey Diamond Heart engagement or the husband presenting his wife with a necklace on their tenth anniversary it passes through four to eight sets of hands and three distinct stages. Polished diamonds are evaluated and priced according to the four Cs of carat color clarity Journey Diamond Heart and cut. In addition long term contracts enable producers to sell large volumes of rough diamonds in a relatively short amount of time compared with the more protracted auction process. For one thing buyers gain access to rough diamonds without having to undergo the strict due diligence review associated with long term contracts. The output from the former BHP Billiton mines is likely to be sold through long Journey Diamond Heart term contracts. In the Stable Production Scenario production Journey Diamond Heart will decline at a compound annual rate of 1. Antwerp is the 101Ct G I1 Ideal Round Genuine Diamond Journey Diamond Heart largest with annual turnover of 0 billion to billion. Unlike the other major producers ALROSA did not decrease production during the financial crisis because it was able to sell excess supply to Gokhran the Russian state agency charged with maintaining a strategic reserve of precious minerals. Middle market players with the lowest profit margins across the value chain and provide our view on key trends in the industry for the next three to five years. Continued growth of the retail sector Although retail sales of diamond jewelry slowed in the key consumption regions of China and India the dynamos of the diamond market’s growth in recent years continue to grow but the pace of their growth has slowed.
But the diamond market from the mine to the jewelry store display case still relies on the human touch. But in recent years De Beers has sold up to 10 of its output at online auctions held by its auction unit Diamdel. Discounts and premiums are influenced by the quality and cut of a particular stone credit considerations the location and type of market where the stone is exchanged and the salability of Journey Diamond Heart the diamond in question. The total level of diamond reserves has remained fairly stable in recent years 134 Ct J Si3 Exc at. Contracts come in two different forms Fixed volume contracts commit the producer to sell volumes specified by the contract for a pre agreed term normally two to Journey Diamond Heart three years. In response to these and other attempts to pollute the pool of natural diamonds producers such as Journey Diamond Heart De Beers and independent laboratories such as AG J HRD and IGI are developing and actively marketing new testing equipment. There is however only a low Journey Diamond Heart probability that a significant investment market for diamonds will develop. Market players in both countries report strong demand for diamonds in the first half of the year. The Journey Diamond Heart traditional hubs of Antwerp New York and Tel Aviv are increasingly focusing on high value stones well developed infrastructure and favorable taxation reviews. The typical large player has been in the diamond business for 0 years or more and many of the market’s traditional practices have changed Journey Diamond Heart surprisingly little since the days when merchants transported diamonds out of India and across Arabia on their way to Europe’s capital cities. The biggest government promoter of beneficiation policies is Botswana which has a longstanding tradition of supporting its local cutting and polishing business. Long term contracts are rarely used because secondary dealers unlike rough diamond producers cannot guarantee a fixed supply of specific diamonds. Billion in sales but ALROSA and Harry Winston Diamond renamed Dominion Diamond in 01 both increased their shares of rough diamond sales and are gradually gaining on De Beers see Figure. The greatest value billion or more in both cases is added at Journey Diamond Heart the jewelry manufacturing and retail stages which both added about billion in value in 01. De Beers has historically had the largest number of long term buyers over 00 in the 1 0s but that number has been decreasing over the years and is now down from as of 00 to 1. Market conditions remain volatile and uncertain making it more important than ever to collect high quality market intelligence to maximize achieved prices and set output levels. Overview of the cutting and polishing market The market for polished diamonds has yet to stabilize in the wake of the financial Journey Diamond Heart crisis and although the longterm outlook remains positive 01 was a challenging year for the cutting and polishing industry. Billion carats during the past three years. De Beers has historically had the largest number of long term contracts with clients tested through shortterm sales. Sales in the Persian Gulf grew by Journey Diamond Heart in 01 down from a compound annual growth rate from 00 through 01 see Figure.