Waldman Diamond Company

WDC: Repeat of Israel's record results in 2000 unlikely, but slowdown in 2001 does not indicate any crisis
February 2001

If anyone was holding his or her breath in anticipation of the release of January's import and export results for the Israel diamond industry, Simeon Loon, a senior manager at the Ramat Gan headquarters of the WDC (Waldman Diamond Company) Group, was not among them.

"The [Israel diamond] industry's performance in the first month of the year reached the level we expected," Loon stated. "Exports of polished goods were down somewhat, as were imports of polished goods. But there's no indication that we're in for a steep fall in performance."

Indeed, compared to January 2000, exports of polished goods during the first month of this year dropped 13.4 percent in weight, from 484,189 carats to 419,870 carats, and about 10 percent in value, from $517 million in January 2000 to $465.4 million in the first month of 2001.

"The figures show no sign that the diamond market is slowing down fast, and not even in the United States," Loon said. "We have a large sales office in New York, and our clients are not flooding us with return goods. On the other hand, it would be presumptuous to expect that we can repeat the formidable marketing results of last year 2000, when the exporters—and WDC Group in particular—broke all the records."

Loon was referring to WDC's Israeli office's export achievement in 2000 when it shipped $62 million worth of polished goods, up from $43 million, in 1999 and $23 million in 1998.

So how much of a slowdown can be expected for the Israeli diamond exporters? "I do not think that the fall will invoke a crisis," Loon said. "I think that—in a worst case situation—this year we'll register a decrease in exports that will not fall beyond the 15 percent mark. The USA—Israel's most important polished diamond market—will most probably perform in a mirror fashion to the previous year. That means that the American polished diamond market will perform much slower during the first half of this year—something we're seeing the first signs of—but in the second half, sales probably will improve again."

As is usual for the beginning of the months that follow the winter holiday season, polished diamond imports dropped sharply compared to the months preceding the holiday season. In January, only 177,510 carats of polished were imported, a fall of 33 percent compared to the same month of the previous year when 265,387 carats were brought to Israel. In value the drop was slightly less steep, 22.3 percent, to $107.6 million in January 2001 from $138.5 in January 2000.

Most Israeli manufacturers who polish goods in low-wage countries have reduced their production, as they are applying a "wait and see" policy with regard to the buyers' market, Loon observed.

Commenting on the rough diamond market, Loon noted that, at first glance, the rough diamond trade seemed to be thriving.

The year 2001 started surprisingly, with a surge in carats imported—1.655 million, 68.5 percent than in January 2000. However, in terms of value, there was a slight fall of 3 percent, with $327.5 million of goods were imported compared to $337.2 million a year earlier.

Practically, Loon noted, this means that the price per carat of the imported rough has fallen below the $200-dollar mark, the lowest average in more than a year. In January, rough exports rose a surprising 78.4 percent in carat weight, to 1,272 million, compared to 712,947 carats in the same month of the precious year. However, in value, the rise was minimal, not even one percent.

"It's a typical situation such a for a wait-and-see period," Loon said. "The manufacturers are playing it safe, moving about as few goods as they can, supplying their core clients with goods, while trying to move mainstream polished diamonds that they know are usually sure sellers. When the market picks up again, the numbers will change once again."