Diamond sales for the Christmas season are 10% to 20% down on last year, according to reports from around the globe, confirming expectations that the industry is in for a tough start to 2001.
Christmas is traditionally the peak diamond season with more than half the year's sales. Exact figures will not be available until late January. But initial reports also suggest a significant return of unsold polished gems to Israel.
Heads of the De Beers diamond company, which controls 70% of global rough diamond sales, recently advised Israel's diamond merchants that it would wait until Christmas sales were in before determining the allocation of diamonds in 2001.
Israeli sources described the market situation as "seriously disappointing with the first half of 2001 looking bleak."
Israel will certainly feel the force of depleted sales. The sector has already seen a significant drop in the number of employees in the past ten years from 10,000 to under 3,000.
America has been the major market for polished diamonds, with the top decile of American society accounting for a significant slice of that market.
Jewelry stores such as Tiffany & Co. and Cartier sell 15% of all U.S. diamonds and department stores such as Macy's account for 50%. But as the economic mood in the United States changes for the worse, the industry is looking to the Far East for more customers.
Israeli Diamond Exchange President Shmuel Schnitzer said whenever trade has fallen off in the U.S. due to a slowdown in its economy, the diamond industry turns to Japan and Hong Kong.
If the euro continues to rally, sales to Europe could also rise, he added. Total exports of diamonds from Israel in 2000 are expected to show a 20% increase on last year, reaching a total of $5.3 billion.