As we enter the busiest season for the world diamond industry, the major diamond centers are facing weak demand. In Israel trading is slow due to the war. The freeze on rough imports has provided some relief to India, but Surat is operating at a fraction of capacity. In Belgium trading is steady but quiet, and sales are few.
This holiday season most players are expecting a soft demand for natural diamonds. In the U.S. lower consumer confidence and fears of recession will impact holiday spending. Natural diamonds are being challenged by lab-growns, and the Chinese market has not yet rebounded as we had hoped. However, I believe that we will see a certain increase in diamond demand in November and December 2023.
And there is an additional challenge around the corner. In the beginning of the year, the G7 will likely announce their system of sanctions on Russian diamonds. There are several competing proposals for how the ban should be implemented.
The WFDB has endorsed the World Diamond Council’s G7 Diamond Protocol. It is a comprehensive approach based on industry self-regulation that would not favor one commercial center over another. The solution proposed by the WDC is based on third-party industry self-regulation rather than government auditing systems. It will be accessible to all parties, including the smallest players. We believe that this model will effectively ban Russian diamonds while causing the least amount of disruption to the diamond industry.
Belgium has put forward a system based on traceability technology that is still under development. It also calls for all rough and polished diamonds to be passed through one center, most likely Belgium itself.
Rapaport is promoting the US Diamond Protocol which would require the US Government to regulate and enforce the ban on Russian diamonds into the United States, using a blockchain technology to trace the movement of diamonds from source to import.
It remains to be seen what system the G7 will implement. One thing is certain, we will all need to learn to accommodate the new system. As I have said several times before, our industry is changing, and we will need to adapt or fail.
Best wishes for a safe and successful holiday season. And happy Diwali to our Indian brothers.