As you all know, during the past three years of my tenure, I have tried to defend the interests and wellbeing of our association’s constituents: the global diamond manufacturing community. More than once, I have stood up and cautioned that the cutting and polishing sector is working with a zero or negative margin.
The premise of my arguments always has been that diamond manufacturing does not create added value and that the role of our sector had been relegated to financing both the upstream and downstream supply pipeline.
I also have cautioned numerous times that the current market structure reminds me of a big bubble that, day by day, is growing bigger and bigger and that it finally would burst.
Among others, I have warned time and again that huge quantities of goods in the market would be detrimental to the overall health of the industry and would create what I have called a ‘disconnect’ between rough and polished prices.
Incessantly, I have tolled the bell, arguing that the presentations made by the various diamond market analysts are baseless and that there simply is no 20-25% of added value to be had in the cutting and polishing of rough diamonds. It is no use to analyze turnover figures, without looking in detail at the price levels and the cost of rough; the cost of financing, the rough purchases and the manufacturing; the terms of payment in the polished market, the memo-ing out of goods, and so forth. Read the whole post here.