Buyers of luxury diamonds have started to “frantically” buy up stones, despite the fact that they are overpriced. According to Bloomberg, the most recent De Beers auction in early June, which was closed, in some cases saw prices up to 10 percent higher than during past sales.
The agency noted that the willingness to buy stones at inflated prices was indicative of a growing demand in an industry that has been brought to a near halt by the pandemic. Cutters and polishers, the backbone of the global diamond market, are now competing fiercely for stones.
Buyers known as sightholders (including Signet Jewelers, Graff and Tiffany & Co.) are buying De Beers stones at the auction in Gaborone, Botswana. A limited number of companies, selected by the concern, take part in the sales; they are called the “diamond syndicate. The concern sets the prices for diamonds, and recently they have been higher than the market prices.
Since 2020, the diamond industry has been hit hard by the coronavirus pandemic and a decline in demand for jewelry. As a result, gem prices have fallen to a decade low. In 2021, diamond production was 20-25 percent below its pre-Soviet level on the background of devastating stocks of mining companies.
The market is not expected to recover before 2025 and supply will grow at a rate of 1-2 percent a year.