There may be an easing in global demand for diamonds to “slow growth” levels of around 2-3% per annum in a market where prices have risen at least 10% this year, according to a prominent diamond analyst. Addressing the first day of the 2008 Paydirt World Diamond Conference in Perth, Johannesburg-based James Allan, Managing Director of boutique finance house, Allan Hochreiter, said rough diamond prices had climbed anywhere between 5% and 25% through calendar 2008. This has been driven by supply shortfalls as output at Australia’s Argyle diamond mine had eased 6 Mct currently in 2008 compared against 2007 – Canada’s production is down 2 Mct, and Russia and Botswana’s output have eased 1 Mct each,” he said.

“The total supply of diamonds worldwide for calendar 2008 is expected to be around 138 Mct – and that has certainly come off the 148 Mct supply evident in 2007,” Allen said. “However, in terms of supply growth in dollar values, the application of an average 13% price increase is boosting diamond supply value from $12.6 billion to $14.3 billion in 2008,” Allen said.

“This is being supported by diamond jewellery sales – particularly in the US which accounts for half the world’s diamond jewellery sales – but understandably, there is some nervousness about the key buying period coming up between Thanksgiving and Christmas,” he said. “However, there will be some gradual increases in supply over the next four years. This may see some price decline from next year ranging from 10% to 20% in 2009 as production levels rise and market demand remains low around current growth rates compared to 8.5% in recent years.” About $76 billion worth of diamonds are sold at the retail level each year.