Dinesh Lakhani Global Director, Kiran Gems
As we move into the final quarter of 2024, the diamond industry continues to navigate through a dynamic landscape. Market conditions are shifting with notable developments that are reshaping the supply and demand framework. Here’s a snapshot of the current state of affairs, with key insights for manufacturers, retailers, and stakeholders in the diamond sector.
LOWER INVENTORY IN THE PIPELINE: A TIGHTENING SUPPLY CHAIN
One of the most significant trends in the diamond manufacturing sector today is the noticeable decrease in inventory across the supply chain. Decreased mining outputs and limited rough diamond supplies are contributing to an overall tightening in available stock. Manufacturers are holding back on large-scale production, resulting in lower diamond stocks in the
pipeline. This reduction in inventory is primarily driven by the caution exercised by producers and manufacturers, who are carefully managing their inventory levels in response to market volatility.
With lower inventory levels, diamond prices are more sensitive to fluctuations in demand, and companies may face challenges in maintaining consistent stock availability for customers. This presents both challenges and opportunities for manufacturers—particularly those who can maintain strong relation- ships with suppliers and manage supply chain dynamics effectively.
RISING DEMAND IN INDIA: WEDDING SEASON BOOST
India, historically a strong market for diamonds, is currently seeing an increase in demand, particularly driven by the wed- ding season. As the country’s economy continues to recover, Indian consumers are returning to traditional practices of purchasing jewelry, particularly for weddings and celebrations. The wedding season, traditionally a peak period for jewelry sales, is currently more robust than anticipated, with increased interest in both polished and natural diamonds.
Additionally, India’s growing middle class and a younger demographic with greater purchasing power are adding to this upward trend. This surge in demand is expected to continue in the short to medium term, further bolstering the market for natural diamonds in the region. Manufacturers looking to tap into this demand will need to focus on ensuring timely deliveries and premium quality, as Indian consumers place high value on both craftsmanship and authenticity.
SLOWLY RECOVERING CHINA MARKET
The Chinese market, which had faced significant setbacks in recent years due to economic pressures and COVID-related restrictions, is slowly recovering. With a more stabilized economy, Chinese consumer confidence is on the rise, and demand for luxury goods, including natural diamonds, is picking up. While the pace of recovery is gradual, there is positive momentum, particularly in urban centers where there is a growing appetite for high-end jewelry.
The recovery in China is expected to remain slow and steady, as consumers become more confident in their purchasing power. In particular, the demand for high-quality diamonds, especially in the bridal and gifting segments, is expected to gradually rebound as China re-establishes itself as a key consumer market for natural diamonds.
LESS MANUFACTURING
BY DIAMOND MANUFACTURERS
The global diamond manufacturing sector is currently facing a situation of reduced output, with many manufacturers scaling back their operations in response to higher costs, lower supply of rough diamonds, and uncertainty in demand. As a result, we are seeing less manufacturing activity, with fewer diamonds being cut and polished. This trend is also driven by the increasing prevalence of automation and the industry’s focus on im- proving efficiency at every stage of production.
The reduction in manufacturing could have a dual impact: while it limits the availability of diamonds in the market, it also pushes manufacturers to focus more on premium-quality pro- duction and value-added services to sustain their margins. Manufacturers that can offer exclusive cuts or sustainably sourced diamonds are likely to thrive in this environment, particularly as consumers become more discerning about their purchases.
OUTLOOK FOR THE COMING MONTHS
Looking ahead, the diamond market is positioned at a critical juncture. The tightened supply chain and growing demand in key markets, especially India, will continue to drive pricing pressures and influence purchasing behavior. However, with less manufacturing and a gradual recovery in China, the industry may find equilibrium in the coming months.
For manufacturers, this means balancing the need for strategic sourcing, maintaining high-quality production standards, and ensuring strong relationships with both suppliers and customers. Those who can adapt to these market shifts while capitalizing on emerging demand trends will be best positioned for success in 2024 and beyond.
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