Real GDP growth to fuel US demands!
‘The Global Diamond Industry 2018, A resilient industry shines through’ report focuses on supply and demand model. Bain report says, Based on our analysis, we expect natural rough diamond supply to change at an average annual rate of negative 1% to 1% in volume terms through 2030. We expect demand to grow 0% to 2% in real value terms during the same time frame.
Our current outlook versus the forecast from the previous year incorporates revised macroeconomic forecast, possible demand substitution from lab-grown diamonds, and reflects fundamental supply and demand factors rather than short-term fluctuations. The short-term supply-demand balance depends on the actions of major producers and efficiencies along the diamond pipeline.
We expect China and the US to maintain their leading roles in the diamond jewelry market. Real GDP growth of 2% to 3% per year will fuel US demand, and expansion of the middle class will reinforce China’s positive long-term demand trend.
India continues to show promising signs of growth, even amid its current market challenges. As India’s middle class expands and bridal jewelry is adopted, demand should follow. Europe and Japan are expected to remain relatively stable, with modest long-term growth prospects.
The rough diamond supply is reasonably predictable over the next 5 to 10 years. However, financial challenges, production mix updates and overall uncertainty over future market conditions could force or delay production. As mining companies can adjust output to react to changing market conditions, production may fluctuate at existing mines.
We based our rough diamond supply forecast on an analysis of existing mines and anticipated production at planned new mines. Our projections also include potential supply from new sources, such as tailings from older mines, reopening of distressed mines, activation of options in resource development plans and recycling of second hand diamonds.
The report was commissioned by AWDC and prepared by Bain & Company and AWDC. It is based on secondary market research, analysis of financial information available or provided to Bain & Company and AWDC, and a range of interviews with customers, competitors and industry experts.
