US Polished Imports Stagnate; India Sells More Diamond-Set Jewelry Rather Than Loose Stones; Trade Figures Continue To Be Questionable; Especially The Rough Imports From The UK And SA Seem 'Suspicious'
September 11, 03Don’t trust diamond trade statistics, especially when they originate from the United States. That country’s rough imports continue to soar recording a 13.4% value growth and a 54.2% carat growth in the first six months of 2003, as compared to the same period last year. Out of total half-year rough imports of $300.1 million, some 66.4% (or $199.4 million) comes from South Africa. We know from the Chairman of the South African Diamond Board that these figures are wrong; his country doesn’t have some $400 million (on an annual basis) “spare” to ship to the United States. The U.S. government and the Bureau of the Census had been advised of this idiocy, but failed to do anything about it. U.S. rough imports from South Africa in 2003 (January-June period) are up by 27% in value and 33.2% in carats.
The second largest source of rough imports remains the United Kingdom, whose rough supplies shrank to merely 10.5% of total imports, i.e. $31.6 million (January-June period), which is 13.2% below the same period last year. The figures substantiate the impression conveyed by U.S. sightholders that the decline in supplies commenced in 2000, when Supplier of Choice was announced. In 1999 the U.S. imported $228 million from the United Kingdom, this figure went down to $185 million in 2000, further down to $84 million in 2001 and was a mere $68 million in 2002.
Maybe, and that’s more a prayer than a profound belief, these statistics are wrong as well – and somehow one might find the missing hundreds of millions. The thought that the U.K. would launder its rough exports to the United States via South Africa would be slanderous and malicious and is something we don’t want to entertain. We don’t have the answer.
Clearly, the rough imports from the U.K. are not the typical U.S. sight goods: the average per carat value of the rough has gone down from $344 per carat in 1999 to a mere $110 per carat today! That cannot be true – and it indeed raises questions as to the “geographic origins” of the DTC sales to the United States. I have always maintained that the United States is the “easiest jurisdiction” to launder conflict goods. The fortunate ending of the relevant conflicts only mitigates diamonds and this circumstance.
The question remains: for what does the United States require some $600 million worth of rough on an annual basis? Especially rough at dramatically falling average per carat prices? In 2001, the U.S. (gem quality) rough imports were $616.31 per carat; today this has gone down to $406.22 per carat – a 34.1% decline in less than two years.
Why report statistics (and devote quite a few pages to them) if they are questionable? Two reasons: even questionable statistics are quite reliable for the identification of trends, assuming that its “mistakes” and deviations are consistent over time; the other reason – we have nothing else to go on. If we dismiss the rough diamond figures published by the country that consumes some 50% of the worldwide diamond product, we may as well forget about all the nice talk about transparency, paper trails, etc. -- and the NGOs would go berserk.
Looking at the polished import side, the figures look much more reliable. At $5.8 billion, the January-June 2003 polished imports are up a fraction of a percent in value (0.6%) and down 9.3% when measured in carats. That seems to confirm that polished diamond imports are stagnating. But that probably isn’t so – and the true picture may well be quite better. The key deviation is India.
Imports of polished stones of less than 0.5 carat in size have gone down by some 18.8% in value and 17.2% in carats (from $1 billion in the first six months in 2002 to $840 million in Jan-June 2003.) The average per carat price has remained stable at about $165 per carat. Is India selling fewer goods to the United States? No, to the contrary. India is selling an ever-larger share of its diamonds as finished diamond-set jewelry and, as such, these are not included in the loose diamond import statistics.
The most exciting development in the U.S. polished import statistics is the growth in imports of polished of larger than 0.5 carat. The main suppliers of these goods are Israel ($2.68 billion in the January-June 2003 period), Belgium ($1.11 billion) and India ($371 million). The first two countries saw their exports to the U.S. increase by 2.2% and 4.5% respectively. However, India is rapidly making inroads into these traditional Israel and Belgian markets: its exports to the United States in this category saw a staggering growth of 28.7% in value and 55.7% in carats.
The excellent Indian export performance has a profound impact on the overall picture of imports of larger goods (polished over 0.5 carat in size), which saw a value growth of 4.5% and a carat increase of 6.3%. This category (at $4.5 billion in the first six months of 2003) remains the lion share of the polished imports. To conclude, however, that the relative share of the better goods is increasing would be drawing an erroneous conclusion – because of the dramatic increase in diamond-set jewelry imports. This also means that the overall picture may not be as stagnating as the polished import figures would suggest. More will follow shortly.