TAGS Annual Review - 2024

Market Overview:

December 2024 marks two years since the post pandemic euphoria saw strong demand in both rough and polished, with strong demand and rising prices month on month.

While traditionally demand and prices have been balanced by the supply of rough, delayed engagements and marriages throughout the pandemic disrupted the supply chain.

Throughout 2024 as the supply chain normalised, prices have reduced steadily from their peak in 2022, for several contributing reasons. Firstly, the huge success of LGD drove down the price of natural stones to a much greater degree than expected. This was particularly evident in the US engagement ring sector where LGD captured approx. 50% of the market. Secondly the pipeline in the midstream remained overstocked, carried high levels of debt, and poor margins. Thirdly China, a huge consumer market for polished, all but stopped purchasing.

While other contributing factors such as fewer buyers avail themselves for supplies of Russian rough, geopolitical tensions, and high financing costs are all contributory factors, the result has been a prolonged period of uncertainty for our industry.

To address these issues, some major upstream suppliers significantly reduced supplies of rough in the hope of seeing some price recovery once midstream inventories were depleted.

It should be noted that despite sanctions and the market downturn, Alrosa are believed to have “operated at full production” of 32m carats in 2024, a reduction of only 4% on last year.

Overall, supply of rough diamonds is reported in the trade press to be around 105m carats for 2024, a level not seen since the 1980’s. A corresponding reduction in manufacturing capacity has also been actioned throughout the year. In Surat, the recession caused by the drop in demand for diamonds from the global market is the largest in half a century, impacting heavily on the huge workforce that relies on polishing for their likelihoods. Some 90% of small diamond units have now closed putting around 200,000 workers into redundancy. However, this equation of both reduced supply and manufacturing was required and should result in significantly reduced stocks throughout the industry as we head into 2025.

This ideally should create margins again for manufacturers and a return of confidence in the market. To augment this, key players in the industry have agreed to raising $100m for the long-term promotion of natural diamonds.

De Beers and the World Federation of Diamond Bourses have embarked on a multi-million dollar advertising campaign. As a result of significant reductions in diamond production in both the upstream and midstream, December saw an increase in the IDEX polished price index for the first time this year, as the first signs of a recovery began to appear.

The increase was the first time the index had shown growth since December 2023.

TAGS Tenders:

As with everyone in the diamond pipeline, TAGS has had a challenging year. We concluded our final sale of the year from 12th - 16th December, with a relatively small tender of around $10m.

During 2024, TAGS presented 20 rough tenders, with a value close to $305m. Sales volumes increased throughout the course of the year, but overall culminated is a disappointing +/- 65% of goods presented.

In +10ct sizes demand has remained strong throughout the year. As the year progressed, we witnessed a slow but steady increase in demand for areas such as 2-10ct, particularly focused on SI ranges, whereas smaller sizes below 2grs, which early in the year were in demand, tailed off as the year progressed. The weakest area now remains 3-6grs.

Post Diwali has seen strong demand as seasonal sales created gaps in polished inventory, and initial reports indicated that prices had started to stabalise, creating a degree of optimism for the US season overall.

In terms of prices, they have remained generally unchanged until recent months where we have seen a small upturn as a degree of confidence returned to the market. However, De Beers decision to reduce prices at the December Sight was a move that was anticipated, but the market had hoped would be delayed. Many prices were reduced by between 10-15%. While this was a decision that was required to try and align prices more closely to the market, it is likely to erode the manufacturers new found margins to where they were before.

Alrosa are believed to have followed the De Beers lead and made similar reductions in their rough prices of between 5-15%. With the market now showing very early signs of a recovery, there is concern regarding large volumes of rough coming onto the market in the coming weeks. ODC will start selling from January, Catoca mine in Angola is reportedly looking to clear significant stock, and De Beers will need to start increasing sales volumes under the direction of the new Government in Botswana. It is also anticipated that they will again increase prices in the New Year, for certain categories, as part of a phased approach to align themselves to the market.

We wish all our clients a good selling season, and a happy, healthy and prosperous 2025.