A Time of Revival

Nine months into the calendar year, the Israeli diamond industry continues ride a growth wave that few would have thought possible a couple of years ago when the ravages of the global financial crisis all but brought the industry to a halt. According to figures published by the Israel Ministry of Industry, Trade and Labor’s Diamond Controller Shmuel Mordechai, the centre reported double-digit growth in exports and imports of both polished and rough diamonds during this period.

Israel’s net export of polished diamonds from January through September 2011 totalled US$ 5.83 billion, a rise of 37.1 per cent over the same period last year. Net rough diamond exports stood at US$ 2.98 billion, a rise of 31.8 per cent. On the import front, inflow of polished diamonds jumped 48.8 per cent to US$ 4.17 billion in the first three quarters 2011, while net rough diamond imports totalled US$ 3.52 billion, an increase of 35 per cent over the comparative period in 2010.

Today, the mood across the industry is positive, and the outlook is bright with a hint of caution. Though revival is in the air, with Asia doing well, and the US showing signs of picking up some steam, everyone recognises the uncertainties caused by the Euro crisis, the fluctuating currency rates, and the still fragile nature of the US recovery. But the focus is on their internal strengths, and buoyed by the confidence that a correct strategy and persistent efforts helped the industry come out of a very dark period, most members of the trade are confident that the future will turn out well.

Moti Ganz, Chairman of the Israel Diamond Institute Group of Companies (IDI) said that the growth is a result of “the dynamism, flexibility and forcefulness of the Israeli industry”.

“The impressive recovery is the result of very hard work. Diamantaires have been able to suit themselves to the changes in the market, and to take advantage of shifting trends. Despite the current uncertainty I am very hopeful that the full year figures will continue this positive trend,” he noted.

Elaborating on his assessment, Ganz, who is also President of IDMA, added, “After an economic crisis that lasted almost three years, the world diamond industry is finally on its way to full recovery. 2011 has been a good year. Demand for polished and rough diamonds is strong and prices are on the rise. There is a great deal of activity in diamond manufacturing and trade. The Israeli industry has surpassed polished export figures for 2008 by 25 per cent and it is clear that it has undergone a full recovery. I am very optimistic that the full year figures will continue this trend.”

Israel, with its sophisticated diamond processing technologies, many developed locally, and its experienced diamond polishers with a rich tradition of know-how and expert craftsmanship specialise in polishing large and medium sized diamonds, of all shapes and cuts. The industry has also expanded its manufacturing capabilities to various offshore locations – in India, China, Africa and elsewhere. The majority of diamonds processed abroad are smaller stones, which are imported back into Israel for grading and sorting, and export.

Eli Avidar, IDI Managing Director said that a pro-active approach by the industry is one of the keys to success. “The Israeli delegation to the Hong Kong September show was the largest of any country. We are seeing more and more first time participants joining our pavilions, especially in Asian markets,” he said.

Yair Sahir, the President of the Israel Diamond Exchange believes that the focus on the East has paid good dividends. “Our local industry is looking to Asian markets as the source of growth for polished diamond exports. We have expanded our participation in trade shows in Hong Kong, China and Thailand and are planning to open an office in Mumbai this year.”

He adds that at the present rate, the number of buyers entering IDE this year will be between 5,500-5,600, up from 5,400 last year.

Newly appointed President of the Israel Diamond Manufacturers Association, Avraham “Bumi” Traub, believes that a steady and measured approach is the way to go from here. “As a result of the previous economic crisis and the current situation we are seeing a greater interest in diamonds as an investment. If in the past we saw a great amount of investment in art, we are now seeing wealthy investors placing part of their assets in diamonds,” he noted.

“Also in the past, periods of crisis were measured in years or months, today there is greater volatility and there are daily fluctuations. We are seeing changes that we did not know in the past,” he says, sharing the following words of advice for the trade, “I propose to all those working in the diamond industry to be very cautious in their own businesses, and in no way to leverage their activities beyond their capabilities. I believe in the motto ‘Drive calmly and go far.’”