All that glitters is not gold. Sometimes it’s diamonds–and that’s what’s putting the sparkle in the eyes of buyers in Asia. Analysts predict that sales of girls’ best friends will top the appetite for the Midas touch, sending prices rising for willing clients in China, India and the Middle East.
Bloomberg reported that demand for the little–and not so little–sparklers is expected to outstrip supply for the next four years, and perhaps will be double that of available supply till 2020, according to a Bain & Co. report that credited the rise to a growing middle class in China and India. Those two countries, along with the Middle East, says Anglo American, controller of the world’s largest diamond miner De Beers, will be responsible for 40% of global diamond consumption by 2015, up from about 8% in 2005.
Edward Sterck, an analyst at BMO Capital Markets, predicted in the report that average prices for rough (uncut) diamonds will likely rise 9% to $145 per carat in 2012; 1.4% in 2013; and 4.8% in 2014. He added that they could continue to rise, adding another 2.6% in 2015 and 3.2% in 2016.
He isn’t the only diamond optimist. Vladimir Sergievskiy, an analyst at Moscow-based Finam Investment, was quoted saying, “We expect emerging nations, first and foremost India and China, to drive demand for diamonds in the upcoming years, while consumption among developed nations is likely to moderate. On the supply side, the commissioning of new mines should be largely offset by depletion of mature ones.”
He added that global demand for diamonds will most likely top supply by 7 million carats in 2016, compared with a 1 million carat shortage this year, and predicted price increases of 9.7% next year, 2.7% in 2013, 3.3% in 2014, 3.2% in 2015 and 3.1% in 2016. This year alone rough diamonds added 24%, according to PolishedPrices.com’s index.