Israel's diamond industry grinds to halt amid coronavirus
Israel's economy is slowly returning to normal with the
gradual easing of its lockdown, but the once vibrant diamond exchange floor in
Tel Aviv remains shut and the diamond district, one of the world's main trade
and polishing centers, is still deserted.
Before the coronavirus reached Israel, the trading floor was
often a hive of activity where hundreds of people from around the world crowded
around desks equipped with strong lamps and scales to minutely examine each
stone.
Social distancing and restrictions on gatherings make the
resumption of business as it was impossible, and industry leaders told Reuters
that polishing factories, often cramped sites where professionals work shoulder
to shoulder, are unable to reopen.
Together with plummeting global demand, the industry is
struggling. Israel's diamond trade declined by 90% compared to a year earlier,
missing out on transactions that would have been worth $1.5 billion in March
and April.
"There are not many goods in the market, so if the
demand will come back, we assume, the price will be more or less the same, like
before the coronavirus," said Yoram Dvash, president of the Israel Diamond
Exchange and acting president of the World Federation of Diamond Bourses.
The industry woes reach far beyond Israel. It has disrupted
miners and retailers alike - heavyweights De Beers and Alrosa have been forced
to cut back production.
"The factories in India, in Israel, in Belgium are not
working," Dvash told Reuters.
He said the sector, which accounted for about 9% of exported
goods in 2019, has lost around $300 million in profit due to the crisis. It has
a credit line with banks totaling about $850 million and industry leaders asked
for government guarantees that would raise it to $1 billion, but that has yet
to come.
"Our business is very traditional, but from the other
side in the last few years, you can see that the digital platforms are growing
every year between 20 to 30%, and the mom-and-pop store are going down. I
assume that after the coronavirus, it will grow up and the sales will be much
more and more in the platforms, in the digital platforms"
The leading RapNet Diamond Index for 1-carat diamonds was
down 8% this year. Dvash said he hopes prices will bounce back if and when
demand returns.
Global rough production in 2020 is projected to decline 16%
to 119 million carats by volume, and 29% to $8.5 billion by value, the lowest
level since the 2009 recession, according to a Rapaport Research Report.
Health concerns are speeding up the transition toward
digital platforms and away from traditional "mom and pop stores,"
said Dvash.
Seeking an alternative, the World Federation of Diamond
Bourses launched a new trade platform – a not-for-profit website called Get
Diamonds – that in five weeks has collected an inventory of $5.5 billion in
diamonds, the biggest in the world, he said.
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