Americans Buying Fewer Gems Puts the Hurt on Diamond Hub Antwerp – by Thomas Biesheuvel (Bloomberg News – July 13, 2017)

An ugly year for diamonds in the vital U.S. market is piling pressure on Europe’s historic center of the $80 billion global trade.

Diamond trading companies in the Belgian port city of Antwerp, which has been the industry’s trading capital for five centuries, were already feeling the pinch from a tightening credit bubble and thin margins. That’s now being compounded by falling demand from some of the industry’s biggest customers, notably retailers Signet Jewelers Ltd. and Tiffany & Co.

“Some of the major retailers have been exerting significant buyer power on diamond companies over the last few years,” said Anish Aggarwal, a partner at consultant Gemdax in Antwerp. “If a diamond company becomes too dependent on such retailers, they can get very exposed.”

The U.S. is the most important market for diamonds, buying more than half the world’s gems, and has been a bright spot for the industry in the past six years as wage growth, job creation and a strong stock market helped boost consumption. Yet that growth has stuttered so far this year. Signet, an industry bellwether, reported a 12 percent drop in first-quarter sales, while Tiffany’s figures also disappointed.

The mounting pressure on Antwerp’s diamond traders came to a head for one of the industry’s leading names last month when Belgian bank KBC Group NV seized assets belonging to manufacturer Exelco NV, which supplies diamonds to Signet in both the U.S. and U.K., as it tried to recoup debts of 26 million euros.

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