Loose-diamond trading exceeded exhibitors’ low expectations at this week’s Hong Kong show as buyers from around the world helped offset slow Chinese demand.
Sentiment was positive and inquiries were strong, with some sellers reporting transactions. Prices remained firm as replacement costs had increased, dealers said.
“I came here without expecting anything,” said Philippe Barsamian, owner of Barsamian Diamonds, an Antwerp-based supplier focused on high-quality small diamonds. “I’m very surprised — it’s far better than what I thought.”
The Hong Kong International Diamond, Gem & Pearl Show opened on Sunday at AsiaWorld-Expo (AWE) amid one of the worst crises in Chinese diamond demand in memory, as well as a generally challenging global polished market.
Exhibitors saw only a minimal improvement in appetite from the mainland compared with last year. However, overall sentiment in the diamond sector has picked up significantly in recent weeks, mostly because of shortages following production cuts by miners and polished manufacturers, they reported.
“People want to be connected to the people who have the goods and who have the continuity,” said Chirag Shah, CEO of Anita Diamonds, a large-stone supplier based in Antwerp. “The first two days, we did phenomenal sales. We sold a lot of important stones. I feel…there will be more business because there will be [a] shortfall in goods.”
He reported steady demand for 5- to 20-carat, D- to G-color, IF- to VS2-clarity diamonds in rounds and fancy shapes, with clients coming from southeast Asia, the Middle East, Europe, India, and some even from China.
The diamond halls appeared busy but were smaller and lower key than in previous years. Many exhibitors took less square footage than in the past. Sellers said several of the big brands were not present. None of the major diamond companies made important announcements, as they often do at the Hong Kong fairs in March and September.
Tariff turmoil
Attendance from Chinese customers was better than last year but still low, as exhibitors had anticipated. Before Covid-19, these constituted a majority of total active diamond buyers at the show. This has dwindled to a small minority following the country’s collapse in demand.
The downturn has stemmed from China’s economic and real-estate crises, as well as consumers’ loss of confidence in diamonds as an investment.
Furthermore, Trump’s first imposition of additional tariffs on Chinese products during his initial term damaged the country’s export business. This forced jewelry manufacturers to shift factories to other locations, reducing mainland wholesale demand for loose diamonds, exhibitors explained.
The Hong Kong government’s limits on cash transactions for precious metals and stones, which went into effect in 2023, have also eliminated some of the informal Chinese demand that the municipality — and exhibitors at the show — used to enjoy.
Adding to the uncertainty, attendees woke up on Tuesday to news that US President Donald Trump had doubled tariffs on Chinese goods to 20%, sparking off the second Sino-American trade war in seven years. This came just as dealers were starting to see signs that China’s diamond crisis was easing.
From disappointments to appointments
Over the past two years, Chinese retailers have shut stores, pivoted away from diamonds, and in some cases sent loose stones back to the trade.
The number of jewelry stores in China kept growing until 2018 before tailing off during Covid-19, but from 2023, retailers started actively closing them, said Vipul Sutariya, director of sales and marketing at Indian polished manufacturer Dharmanandan Diamonds.
This rate of closures has now declined, creating demand for fresh goods that did not exist when retailers were redistributing inventory from shuttered shops to surviving ones, Sutariya explained.
In light of this, Dharmanandan saw modest interest in 0.30- to 0.79-carat, D to H, VS diamonds from Chinese buyers at the event — the classic items that were popular on the mainland before the downturn, the executive said.
“We had a few appointments — not many, but last year [Chinese buyers] were not there at the show [at all],” added Akshay Shah, sales director for Dharmanandan’s solitaires division. “This time, very few people have started just checking. So there is something.”
The mood was better than at the September 2024 Jewellery & Gem World Hong Kong show, which was “almost a little depressing,” said Rishi Mundra, managing director of Hong Kong diamond manufacturer and trader Stellar Group HK. He has also seen a “minute” rebound in Chinese demand.
“The property market seems to have somewhat stabilized, [and] the same [goes for] the stock market,” Mundra commented. “But, again, it’s not something that one can really count on.”
Asian markets
Other countries in the region had a decent turnout, with buyers present and active from Thailand, the Philippines, Indonesia, Cambodia, Malaysia, Vietnam, and more, exhibitors said.
Demand from these markets focused on 1-carat and larger, D to F, IF to VVS diamonds in round and fancy shapes, said Mundra. Buyers wanted triple-Ex goods — or double-Ex for fancies — and no fluorescence, he noted.
More generally, exhibitors observed a strong market for melee, which has suffered less from lab-grown replacement than have 0.30-carat and larger items. Diamonds above 2 carats — and especially above 5 carats — were also sought after, partly because of shortfalls in the relevant 5-carat and larger rough.
Meanwhile, suppliers were reluctant to budge on prices as the cost and difficulty of sourcing nice goods has increased, they reported.
The RapNet Diamond Index (RAPI™) — reflecting round, D to H, IF to VS2 goods — stabilized for 0.50-, 1- and 3-carat sizes in February, with the index for 0.30-carat stones jumping 3.7%. Rough prices rose some 5% at recent tenders in Antwerp and Dubai, dealers reported.
“A lot of regular traders are here, thinking someone will give you a good deal, but no one wants to reduce prices because of the rough [price],” said Nilesh Chhabria, chief operating officer at Mumbai-based manufacturer Finestar Jewellery & Diamonds.
Slow but sure
Still, the absence of significant Chinese demand has left a gap that the trade has addressed by slashing production rather than finding sufficient alternative markets. Attendees were hopeful this important source of revenue would recover, but no one thinks this will happen overnight.
“I’m not telling you it’s booming, but…especially in the last six months, I’m feeling the sentiment is better,” said Lawrence Ma, president of the Diamond Federation of Hong Kong, China, and CEO of the Lee Heng Diamond Group.
“Usually, it takes three months to translate into market action” as companies sell off their inventory and then replenish it, he pointed out. “Fingers crossed, [the] market should be better three to six months from now.”
The Beijing government’s policies for economic recovery will also take time to bear fruit, Ma predicted, equating them to traditional Chinese medicine.
“We don’t take antibiotics and try to cure yourself within one or two days,” Ma said. “[We] drink some Chinese herbal medicine. It will take longer for you to feel better, but it’s more sustainable.”
The loose-stone show ends Thursday. The Hong Kong International Jewellery Show, which focused on finished pieces, runs from Tuesday to Saturday at the Hong Kong Convention and Exhibition Centre (HKCEC) in the Wan Chai district.
Around 4,000 exhibitors have attended this year’s twin shows, nearly 70% of them from outside Hong Kong, according to the Hong Kong Trade Development Council (HKTDC), which organizes the fairs.
The reporter attended the Hong Kong International Diamond, Gem & Pearl Show and the Hong Kong International Jewellery Show as a guest of the Hong Kong Trade Development Council (HKTDC).
Image: One of the diamond halls at the Hong Kong International Diamond, Gem & Pearl Show. (HKTDC)
