Melvin Moss, President of Regal Imports, says there is no justification for the rough supply to the market in the first quarter of 2016 of around $3 billion as there is no huge demand at the retail level for polished goods as seen by the "lackluster diamond sales in Hong Kong and the disappointing results at the BaselWorld Fair".
The polished production from first-quarter rough sales is already entering the market with the rest arriving at the end of April and beginning of May which is traditionally the slowest time of the calendar year. "I don’t understand the rationale of diamond cutters," he writes on his LinkedIn page.
"Polished demand is not improving enough to warrant such a large gamble. Wholesalers and retailers are not interested in stocking quantities of diamonds right now. They are making very cautious buying decisions and holding minimal inventory. Diamond retailers and wholesalers, the players closest to the consumer, are not willing to gamble; and why should they with the knowledge that manufacturers have over bought and will soon need cash. The second quarter will be a buyers’ market."
He says there is some demand for specific polished diamonds not the full range of production, meaning "there will inevitably be another glut of unwanted goods". He writes that the only people who have realized that demand does not justify the amount of goods entering the market are the banks, with Standard Chartered Bank last week demanding more loan protection from the diamond industry. Moss claims that the diamond industry is defensive and has completely forgotten its offence.
"The diamond industry is obsessed with fending off criticism rather than speaking in positives. How can industry create desire for diamonds if they are not telling consumers why they should be interested! The diamond industry is relying on past tradition rather than creating new traditions. This industry pushes back against new developments and new ideas."
With the world in trouble with geopolitical crises across so many regions, acts of terrorism causing huge uncertainty and financial volatility, this is the time for the diamond business to go on the offensive and explain the case for buying diamonds.