Israel optimistic after heavy trading slump

Image: Polished goods in a case at the 2016 edition of International Diamond Week in Israel. (Shutterstock)


Leaders of Israel’s diamond sector expressed confidence in a recovery after strong trading in the final months of last year offered hope that the worst of the coronavirus crisis was over.

Israel’s final 2020 result — a 31% slump in polished exports — was better than many had feared during the height of the downturn, executives noted last week. Sales in December skyrocketed as demand picked up during the holiday season.

The Covid-19 pandemic was severe for the Israeli diamond sector, cutting off its strongest sources of business in the US and the Far East and pushing the country into three lockdowns. Israel Diamond Exchange president Yoram Dvash warned in July that the nation’s industry was “on the verge of collapse” after exports fell by more than 80% in the period from March to May.

However, the market improved from August onward, as retailers prepared for the holidays and shortages emerged following closures at manufacturing units, especially in India. This helped the Israeli trade recuperate, despite a second national shutdown in September and October.

“The fourth quarter was much better, and the final month was exceptional,” Dvash said in a recent interview with Rapaport News.

Israel ended 2020 having shipped $2.37 billion of polished for the year, down from $3.41 billion in 2019, the Ministry of Economy and Industry reported last week. The volume of exports dropped 23% to 1.1 million carats, with the average price slipping 9% to $2,195 per carat.

Polished imports slumped 37% to $1.53 billion for the year. Rough imports tumbled 40% to $1.07 billion, while rough exports were also down 40% at $859.1 million.

In contrast, polished exports more than tripled to $189.3 million in December, from $54.9 million a year earlier, reflecting the release of pent-up demand. Export volume rose 37% to 78,057 carats, while the average price more than doubled to $2,425 per carat, compared with $966 in December 2019.

“The final months of the year indicated an easing of the declines and a recovery in the industry,” Ophir Gore, the nation’s diamond controller, said in a statement. “If this trend continues, 2021 should bring good news for the Israeli diamond sector.”

Israel reports shipment data on a net basis, meaning it subtracts goods that returned, usually because they went unsold. On a gross basis, the nation’s polished exports fell 22% to $410.9 million in December, but buyers sent back fewer diamonds than normal — a result of the supply shortages, Dvash explained. Only 54% of polished exports returned to Israel that month, compared with 90% a year earlier.

“In the past, when you requested a round, 3-carat, F, SI1, the buyer would have got five stones [to choose from], because there was variety,” the bourse president continued. “Now he gets two stones.”

Currently in its third lockdown, Israel is looking to continue its recovery in the face of an uncertain global diamond market.

“Last year was not a happy year, without doubt,” Dvash asserted. “It was a hard year. But, all in all, it was much better than we expected. We started the [crisis] with a decline of 80%-plus, and the average at the end was 30%. We can’t be proud of that, but looking at the data for the end of the year, we are a little optimistic that things will be better.”