SURAT (Commodity Online): Even though there is an increased demand from China for diamonds, the diamond traders in Antwerp may not see a recovery in demand in the US and Europe until 2011, causing concerns in Surat, the world’s biggest diamond polishing city in India.

According to Pierre De Bosscher, chief executive officer of the Antwerp Diamond Bank (ADB), one of the industry’s two largest financing lenders, the market is bottoming out and the rise in demand from China and India may not be enough to offset the fall in US demand.

ADB and ABN Amro’s International Diamond and Jewelry division have helped Antwerp’s estimated 1,800 diamond firms survive the recession by not pulling credit lines and even extending time periods for repayment of debts despite a decline in business and collateral.

By maintaining lines of credit, ABN Amro prevented a lot of insolvency in the industry.
 
Prices for rough diamonds fell about 35 per cent during the four- to five-month span starting in September 2008 and global retail sales of diamond jewellery declined as much as 20 per cent since that time.
 
After the crisis erupted, ADB and ABN Amro told diamond miners to restrict the supply of diamonds, which most did, and simultaneously advised their customers, the diamond dealers, to stop buying unnecessary stock.

Dealers, many facing slow payment from customers, needed to reduce inventory, focus on collecting their bills and shorten their payment terms.

As the miners and manufacturers are commencing operations again, the two warn that excess supply would be the biggest threat to a recovery. Therefore, they are still urging miners to keep supply in check.

The market is bottoming out. While demand from China and India is increasing, it isn’t enough to make up the shortfall from the US.