Editor’s Note
While industry-wide alarm over diamond inventories may soon subside, a return to full stability is not yet assured. This analysis suggests cautious optimism, with a potential recovery emerging by mid-2025.
The general opinion across the industry seems to be that the alarm bells may soon stop ringing. And though midstream inventories are not yet at what can be considered “normal” levels, a degree of stability should return in the near term, perhaps as early as the second quarter of 2025.
Nevertheless, diamantaires in India are still cautious. They say that stability has been achieved due to better correlation between supply and demand. While there will not be a return to the volatility of 2023-2024, significant growth is not immediately visible on the horizon.
There has been a steady decline in rough supply to the diamond market since the highs of 2022. Both De Beers Group and Alrosa reported significant drops in sales in 2024 and have estimated that 2025 sales may sink even lower. Zimnisky estimates that both companies are now maintaining higher rough inventory levels compared with a year ago. He projects that the total annual supply of rough to the industry will be in the range of 105 to 115 million carats.
Looking ahead, Narvekar projects the supply of natural rough will continue at the current levels for the next five to seven years, at least.
Consolidation and greater coordination—these are the buzzwords for the diamond supply chain going forward. There is a growing understanding that maintaining stability across the pipeline has to be a shared responsibility.
Meanwhile, rough distribution systems will be modified as the Okavango Diamond Company, the rough diamond sales and marketing company owned by the Botswana government, gears up to sell the additional rough that will start accruing to it, per the country’s new 10-year sales agreement with De Beers, and Angola seeks to step up its sales.
It remains to be seen what shape beneficiation will take as the industry needs to strike a balance between socio-political goals and cost-effective operations.
Dubai has emerged as a strong player in distribution, but this could change following recent modifications to taxation in India designed to simplify compliance and encourage diamond miners to do business with Indian companies. Miners may consider direct sales to manufacturers from within the Special Notified Zones, set up by the Indian government in Mumbai and Surat, more attractive.
Consolidation also has occurred in the midstream. A sizable portion of the polishing capacity in Surat has shifted to lab-grown diamonds, and the process will continue. The share of larger players may rise, with small and mid-sized manufacturers remaining mostly in niche areas.
Lab-grown diamonds are here to stay. How will they impact the emerging landscape? A November 2024 article by McKinsey & Company titled, “The Diamond Industry Is at an Inflection Point,” outlines possible scenarios for the market.
Zimnisky stressed that clear differentiation is needed.
