Is the World Facing a Global Diamond Shortage?

Commodity trading has always been a contributor to Dubai's economy. Within the commodities sector, the diamond industry has been one of the primary industries that has flourished over the years. Despite this, studies and statistics show that the global diamond market will lose about 15 million carats, which translates to more than 10% of the global natural diamond supply. This decline will continue over the next decade, even if global jewellery demand continues to increase by one to two per cent annually.

Although growth in jewellery consumption may slow due to trends in the US and Chinese markets, there will be a natural diamond shortage that will lead to severe price fluctuations. The prices for colourless diamonds less than five carats have been increasing for 1978. The trend has been much more recently pronounced in coloured diamonds, where the cost of pink diamonds has seen a 300% increase in the last decade.

 

The diamond supply is projected to decrease by 16% by 2023

In turn, manufacturers will also reduce deliveries since there are barely any growth projections. At the same time, demand will grow at an annual rate of two to three per cent, giving rise to a deficit that will be directly offset by rising diamond prices. The United States will remain to be the largest market for polish diamond consumption, with a market share of about 50%. However, the main markets that will see a rise in use will be in Asian countries, particularly China and India. While the European market is experiencing stagnation, the Japanese market is remaining stable.

The diamond for diamonds generally correlates with an increase in a population's income. In this case, logic tells us that the demand for jewellery and diamonds will continue to grow as society sees income growth. Experts do not see any threat from synthetic stones. They will occupy their niche in the market, along with high-tech gadget lovers with a low likelihood of taking a significant market share.

 

Written by

 

Mariia Iurko

Associate Consultant, EEG

Economics
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