COVID-19 has had a devastating impact on almost all industries and jewellery is no different. The human element is integral to the production and selling of diamonds, and with most of the world being shut down for months, the supply chain was forced to grind to a halt.
The Supply Chain
The industry is deeply reliant on Antwerp for all aspects of diamond production. The city struggled to contain the virus, and the effects of this reverberated around the world. When Antwerp came to a standstill, so too did many jewellery producers worldwide. This was an indicator of the overall fragility of this supply chain and has highlighted that perhaps the world is overly reliant on the city for diamond production.
Antwerp has faced major setbacks with the virus. This city handles 84% of the world’s rough diamonds and it is very likely that any diamond sold today has been in Antwerp whether it was for the cutting, polishing or final sale of the stone. Although India cuts most diamonds, the stones that are cut in Antwerp are usually the most valuable and largest. However, since March, exports of polished diamonds from Antwerp have dropped 46%.
The Closure of Mines
During the pandemic, demand for diamonds dropped drastically, and consequently, so did the price. This impact was then offset by several diamond mines closing and remaining closed indefinitely. This reduction in supply, ideally met with a steady demand as many countries re-open, will cause prices to steadily increase again. However, in some of our largest supply countries such as Canada, they have succeeded in keeping the virus at bay among their miners and have largely remained open.
What Does This Mean for Prices?
Another factor that all jewellers must now consider is the rising metal prices caused by COVID-19. In times of financial turmoil, it is often the case that investors turn to gold due to the low risk of such an investment. This has driven the price of gold to an all-time high, surpassing the price of Platinum. There is a chance that investors may turn to other metals (Platinum, Palladium) soon, driving those prices up too. However, for now, there may be a shift in consumer preferences away from the expensive gold.
Despite all this, the outlook for jewellers is not all bad. A lesson from this pandemic is that the level of human handling in the process is unsustainable and this may be cause for many retailers to improve their online presence to adapt to the pandemic world. People are still getting engaged, weddings are still happening (albeit at a smaller scale), and diamonds are still sparkling, so although the industry has taken some hits, there are still plenty of opportunities.