Global demand for diamonds set to soar

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dubai diamonds trade
Women walk past the Emirates Diamonds shop at Gold and Diamond Park, a shopping mall specialised in gold and diamond retailing, in Dubai November 15, 2011. The United Arab Emirates, the world's fourth-largest oil exporter and home to gold trading hub Dubai, is rapidly becoming a force in trade of another highly valuable commodity: diamonds. Photo - Jumana/Reuters

The global diamond demand is expected to double by the end of the decade?6% every year through 2020. According to the ?2011 Global Diamond Industry Report?, released by Bain & Company, the demand is outpacing the supply that has led to the increase in prices.

The report says there is strong demand for high-quality diamonds in China and India. The combined projected growth in these two countries is likely to reach 30% by the end of the decade. High net worth individuals and banks in China, India and the Middle East have shown interest in investing in large high quality diamonds. But United States continues to retain the number one position in the world market.

The diamond industry is making every effort to improve transparency related to the diamond industry in terms of valuation, liquidity, and establish diamonds as an investment asset.

Some of efforts include creating an exchange for polished diamonds, defining the criteria for investment grade diamonds, and reduce number of price points

Major highlights of the report

  • By 2020 the annual production will be around 175 million carat. Thirteen new mines have been explored and add up to 23 million alone in production.
  • The Internet will have a modest role as a distribution channel for polished diamonds.
  • Family-owned diamond retailers will continue to feel setback, as specialized retailing chains continue to dominate the market.
  • Rough producers and retailers are the most profitable segments in the diamond value chain business. Their operating margins are 22 to 24 per cent and 5 to 10 per cent respectively.

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Source: Business Intelligence-ME

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