Editor’s Note
This report from the Hong Kong diamond show highlights a market finding resilience. While demand from mainland China remains subdued, robust international buyer activity has led to a more positive outcome than many anticipated, supporting firm prices.
Sentiment was positive and inquiries were strong, with some sellers reporting transactions. Prices remained firm as replacement costs had increased, dealers said.
The Hong Kong International Diamond, Gem & Pearl Show opened on Sunday at AsiaWorld-Expo (AWE) amid one of the worst crises in Chinese diamond demand in memory, as well as a generally challenging global polished market.
Exhibitors saw only a minimal improvement in appetite from the mainland compared with last year. However, overall sentiment in the diamond sector has picked up significantly in recent weeks, mostly because of shortages following production cuts by miners and polished manufacturers, they reported.
He reported steady demand for 5- to 20-carat, D- to G-color, IF- to VS2-clarity diamonds in rounds and fancy shapes, with clients coming from southeast Asia, the Middle East, Europe, India, and some even from China.
Many exhibitors took less square footage than in the past. Sellers said several of the big brands were not present. None of the major diamond companies made important announcements, as they often do at the Hong Kong fairs in March and September.
Attendance from Chinese customers was better than last year but still low, as exhibitors had anticipated. Before Covid-19, these constituted a majority of total active diamond buyers at the show. This has dwindled to a small minority following the country’s collapse in demand.
The downturn has stemmed from China’s economic and real-estate crises, as well as consumers’ loss of confidence in diamonds as an investment.
Furthermore, Trump’s first imposition of additional tariffs on Chinese products during his initial term damaged the country’s export business. This forced jewelry manufacturers to shift factories to other locations, reducing mainland wholesale demand for loose diamonds, exhibitors explained.
The Hong Kong government’s limits on cash transactions for precious metals and stones, which went into effect in 2023, have also eliminated some of the informal Chinese demand that the municipality — and exhibitors at the show — used to enjoy.
Adding to the uncertainty, attendees woke up on Tuesday to news that US President Donald Trump had doubled tariffs on Chinese goods to 20%, sparking off the second Sino-American trade war in seven years. This came just as dealers were starting to see signs that China’s diamond crisis was easing.
Over the past two years, Chinese retailers have shut stores, pivoted away from diamonds, and in some cases sent loose stones back to the trade.
The number of jewelry stores in China kept growing until 2018 before tailing off during Covid-19, but from 2023, retailers started actively closing them, said Vipul Sutariya, director of sales and marketing at Indian polished manufacturer Dharmanandan Diamonds.
