The five reasons behind the historical increase in "cheap" diamonds in the world

An increase in the demand for diamonds that began in the first COVID blocks shows does not show signs of pause, and now even the smallest and cheaper stones are trapped in a shopping frenzy.

The low -end diamonds, of the type you can find in small shopping centers, or for example if it is in the US, jewels that are exhibited in a Walmart, have been a difficult business during most of the last decade.But there was an excess of supply of cheaper stones, which tend to be small and defective, and the anemic growth of demand kept low prices and reduced gain margins.

But the last three months showed an abrupt change as demand between American consumers increases, who buy about half of the world's diamond jewelry, while the closure of one of the largest mining of the globe exercisesPressure to offer.

In the raw diamond market, the value of low -end stones rose impressive (more than 30% in North America, and up to more than 35% in Latin America).While that does not automatically translate into similar increases on store shelves, prices can start climbing for diamond jewels that are cheaper.

Most likely, flashes in that pair of earrings on offer (which were seen before) become a little smaller or more defective as retailers look for ways to reduce costs.The evidence of the increase in the demand for diamonds is everywhere.Signet Jewelers, owner of retailers such as Kay Jewelers and Zale, said this week that Christmas sales reached a record and increased their income expectations for the sixth time since April.Alrosa PJSC of Russia, who competes with De Beers to become the largest diamond mining company, also recorded the highest annual sales of its records.

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De Beers responded this week by raising the prices of raw diamonds in almost 10%.That is one of the most aggressive price increases in years.The highest increases occurred in the cheapest products, the type of stones that can be sold for less than US $ 200, and some categories grew almost 20% the price.

In the secondary market, where De Beers and Alrosa buyers sell to other gem manufacturers, the boxes of some cheap diamonds have been changing hands for premiums of up to 50%, an almost unheard of level.Even after Beers's latest price increases, buyers could negotiate some boxes for premiums of around 10%.

The recovery of the sector has been supported by American consumers: the demand for jewels increased more than 30% by 2021 (versus 2020) in the crucial period of Christmas sales, and almost 20% in Latin America.At the same time, the offer has been pressed after Rio Tinto Group closed its giant Argyle mine, which produced some of the cheapest stones in the world, while other mines, such as the Venetia project of De Beers, reduced their operations.

The highest prices of low -end stones are good news for miners, but not necessarily a game change.While each mine is different, a general rule of the global industry is that 20% of the production (the best stones) represent about 80% of the profits.