Antwerp World Diamond Center closes difficult year 2001 on a positive note

The Antwerp diamond sector registered a turnover of 23 billion dollars in 2001, or a 12 percent decrease compared to the 25.8 billion of the record year 2000 and also less than the 23.7 billion of 1999.

The record year 2000 was generally expected to be followed by a downturn. On the one hand, the year started off in a weakened economic and stock market climate. On the other hand, the 2000 year-end sales have fallen short of expectations, leaving retailers with large stocks at the beginning of the
new year.

In 2001, rough diamond imports fell by 17 percent to USD 6.15 billion, while exports dropped by 18 percent, totalling USD 5.72 billion.

The global economic slowdown caused big diamond producers to put cheaper products on the market, so that total value dropped significantly.

At the same time, the slumping demand put pressure on wholesale prices in other segments. In response, De Beers adapted its assortments in the middle of 2001, simultaneously cutting back its sales targets from USD 4.8 to 4 billion.

The decline in rough exports (in USD) could be limited as the year went on (-22 percent 6 months; -20 percent 9 months; -18 percent 12 months). In spite of the lower prices, goods were nevertheless sold later in the year rather than high stocks being maintained.

The processing centres in New York (-23 percent to USD 277 million) and Tel Aviv (-23 percent to USD 1.62 billion) recorded the sharpest decrease in imports from Antwerp. Total rough imports into Tel Aviv dropped by 19 percent to USD 3.37 billion, indicating that Israel was buying comparatively more goods directly from diamond producing countries in 2001.

The Asian polishing centres remained more stable compared to the overall downturn in the rough market: India -18 percent (USD 2.30 billion), China +1 percent (USD 272 million), Hong Kong -11 percent (USD 178 million), Thailand -16 percent (USD 170 million) and Sri Lanka -9 percent (USD 113 million).
Dubai in the United Arab Emirates continues to profile itself as outpost of Mumbai and bought roughs worth USD 186 million (+59 percent).

“The confirmation by De Beers mid-2001 that it would not renounce its role of market custodian has restored confidence,” says Peter Meeus, HRD's Managing Director. “The downward price spiral that hovered over the sector first of all hits the small and medium-sized businesses in the industry and would in the end undermine the sector.”

On the polished diamond market, the most notable trend is the increased trade volume: goods are offered several times to potential buyers at different places. Imports reached a particularly high level of USD 5.14 billion (+0.5 percent), while exports were more in line with the market with USD 5.79 billion (-5 percent).

Exports to the US (-15 percent to USD 2.01 billion), Israel (-17 percent to USD 526 million) and Japan (-22 percent to USD 222 million) took severe blows. Exports to those markets fell especially in the second half of the year.

Hong Kong, where sales rose by 13 percent to USD 554 million, takes the place of Israel as the second outlet market for Antwerp diamonds. The European markets for jewellery production are in fine shape: Italy (+16 percent to 431 million) moves up into 4th place, France (+6 percent to USD 333 million) and Spain (+11 percent to USD 83 million) hold on to their 6th and 12th place respectively, while Germany (-2 percent to USD 191 million) loses its 9th place to the UAE (+58 percent to USD 210 million). The European market did particularly well in the first 6 months, whereas the Asian markets recorded their best results in the second half of the year.

In general, the 4th quarter jacked up the annual results of the polished diamond market, after a particularly difficult (late) summer. Especially the month of November saw a strong peak in traffic, in Antwerp, Tel Aviv, and Mumbai.

Peter Meeus: “2001 highlights the global character of the diamond sector. Competition in one market intensifies as soon as another market witnesses a downturn. The prime challenge will be to expand existing markets such as Europe and the Middle East while at the same time penetrating new markets such as China and India.”

At the retail level, the year-end sales in the US proved a success. Consumer spending was up 2.1 percent. What is striking - probably as a result of the events of September 11th - is that especially household products (furniture, decoration, music, and home entertainment) were in great demand (+5 to +11 percent). Jewellery sales went up by 0.6 percent, which contrasts sharply with the overall slump in demand for luxury products.

Japan falls back into 8th place for polished diamond imports from Antwerp, still accounting for USD 222 million, or a 22 percent decrease. In 1995, before the recession, Japan was the second largest buyer of polished diamond from Antwerp, with USD 683 million or 14 percent of total exports.

"Economic indicators suggest that consumption may be expected to pick up, especially in the second half of 2002. The final results of the 2001 year-end sales will be determining for the first two quarters of this year.
The first figures in any case indicate that, unlike last year, retailers' inventories are now at a normal level," Meeus concludes.

Source: Diamond High Council Press Release
Antwerp, January 2002