No sparkle as coronavirus shutters Israel's diamond industry
Exports of polished diamonds dropped by some 28% to $4.9 billion last year as the global industry was hit hard by the US-China trade war and mass pro-democracy protests in Hong Kong.
By EYTAN HALONA trader inspects a diamond during a show at Israel's Diamond Exchange near Tel Aviv, Israel(photo credit: REUTERS)
Israel's renowned diamond industry, a world-leading trade hub and and polished diamond exporter, has endured a gloomy couple of years.Exports of polished diamonds dropped by some 28% to $4.9 billion last year as the global industry was hit hard by the US-China trade war and mass pro-democracy protests in Hong Kong.The usually bustling trade floor of the Israel Diamond Exchange in Tel Aviv, commonly known as the Bursa, has now fallen silent. Trading has almost ground to a halt in the midst of the coronavirus outbreak, and the vast majority of workers have gone on unpaid leave.Since the turn of the year, Israel's diamond market has seen an estimated $1.8b. reduction in operations. Unlike stock exchanges that continue at bumpy times, diamond trade is based solely on the exchange of physical commodities. The Chinese and Hong Kong markets are only just starting to recover, and the US market shuttered."The exchange is a ghost town," Israel Diamond Exchange president Yoram Dvash told The Jerusalem Post, highlighting that the livelihood of some 15,000 families depends on the trading center, one of the four largest in worldwide."Traditional trade has dropped off and shifted to conferences in recent years, but the large conferences have been cancelled due to the virus. There has also been a shift to online trading, but there is currently no appetite to buy."Dvash called on the government to offer specific tools to some 1,500 businesses of various sizes within the exchange, emphasizing that it is imperative for Israel to maintain its "competitive advantage" in the global industry.Supportive government measures including the deferral of VAT payments, for example, are of little assistance to diamantaires selling VAT-exempt products.Together with the World Diamond Council and three other leading nations for rough diamond imports, the Israel Diamond Exchange appealed to key suppliers - the De Beers Group and Alrosa - to request "complete flexibility" for purchases of rough diamonds under existing cash before delivery contracts.
"The banks are a key factor in overcoming this crisis. If they will take a flexible approach, that understands the problems of the small businesses, we will be able to emerge better from the crisis," said Dvash, who also emphasized the unprecedented nature of the current crisis."After the September 11 attacks, trading resumed after 10 days. Here, we have gone from 100 to zero. The sums are huge. We will overcome it, but we need government support."Expressing his hope to see a quick recovery once the crisis subsides, Dvash also paid tribute to fellow members of the World Federation of Diamond Bourses, especially members of the New York haredi (ultra-Orthodox) community who have fallen victim to the illness.The crisis has also triggered controversy and disagreements within the diamond industry, notably after leading diamond and jewelry trading network RapNet - belonging to Jerusalem-based Martin Rapaport - slashed listed diamond prices by an average of 7%.Hundreds of companies responded by abandoning the website, causing members of the network to vote to suspend the price list. Many have already chosen to join rival trading platforms, including Get Diamonds and IDEX."The industry didn't welcome the decision to decrease the value of diamonds dramatically as there is no trade. The industry asked on what basis the decision was reached," Dvash said."Due to lack of transparency, and the lack of deals, the world of diamonds - led by young people - said we do not want to accept this leadership. It could be that the drop in value will be greater once trading starts again, but at least the market will dictate it."
