The year started quite well for the diamond industry and the sales were quite robust, according to Alrosa, a leading diamond producer. However, the outbreak of the pandemic has led to a fall in demand in the Chinese market, which accounts for about 15% of the global share. The 11-weeks lockdown in China caused all the jewelry stores to bring down their shutters, which resulted in a reduction in sales.
Across the globe, social distancing and quarantine measures along with deteriorating economic conditions have led to an overall decrease in the demand for luxury items. In Match, the second-largest producer of diamonds, De Beers, reported a 28% reduction in sales to $355m from $496m in 2019. With 12 sales cycles per year, this notable decrease was due to the COVID-19 outbreak, as the first sales cycle stood at $551 at the beginning of 2020.
There is also a decline in the production of the diamond, as mining has been disbanded as a non-essential service in South Africa, as the country entered a lockdown phase on 26th March 2020. Other mines across the world in India, Lesotho, Namibia, Zimbabwe, and parts of Canada are also under restrictions following the lockdown.
However, as there’s no lockdown in Russia, Alrosa is relatively in a better place, but the company is following restrictions to avoid the spread of the infection while running their operations. De Beers is also not much impacted, as compared to the other companies. Most of its mining activities are centered in Botswana, where it has not been restricted or suspended despite the lockdown.
Coming to gold and other metal jewelry, gold is currently on an upward trajectory, after suffering an initial hit, but nothing much hopeful can be said about silver right now.
With most of the world under lockdown, we can all but pray for things to get better and normal conditions to restore.