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China’s diamond trade weighs virus effect

Diamond trading in China remains slow, as retail is almost dead, bourses are quiet, and even getting rough goods into the country has hit obstacles. Dealers expect a release of pent-up demand when the coronavirus goes away, but for now, all they can do is manage a difficult situation.

“There is always demand for diamonds in China, but currently consumers can’t go shopping, [as] hardly any shopping malls [are open],” said Lin Qiang, president of the Shanghai Diamond Exchange, in an email to Rapaport News Monday. “When the epidemic is over, the backlog of demand will be unleashed.” While the bourse has been open since February 10, when authorities permitted businesses to restart, many people have elected to work from home. Some have had to self-quarantine if they’d been traveling. “Most members are still not at work — especially foreign members,” Qiang noted. “Our Indian members are still in India. Even if they came back at the end of this month, they would have to stay at home under quarantine for 14 days. Therefore, we think that business will return to normal in mid-March at the earliest.” In the meantime, officials at the building have been taking people’s temperatures and implementing other measures to stop the virus spreading, he said. Concerns about the health situation escalated during the Lunar New Year period, when Chinese consumers traditionally travel and shop. As well as cutting the selling season short, the outbreak led to companies prolonging their closures due to enforced restrictions and the lack of luxury demand. “The traditional shopping season for diamonds and jewelry did not happen this spring,” commented Liang Weizhang, general manager at the Guangzhou Diamond Exchange in the Guangdong province. “Stock is a big challenge for the companies, from brands to wholesalers, [and] they may cut their purchasing budget in the first quarter.” Tight border controls have “played havoc” with China’s ability to import rough entering via Hong Kong, the Guangzhou exchange said in a statement last week. This created challenges for Guangdong’s large manufacturing sector, which accounts for 75% of China’s rough processing. The exchange, working with customs officials, set up a fast channel enabling clearance of all goods within a few hours, it said. However, the general disruptions have hampered traders’ ability to carry out normal business. Most bourse members went back to work last week, but many people are staying indoors, Weizhang said. “The current market is still quiet due to the difficulties of face-to-face business gathering,” he continued. Nonetheless, he predicted “retaliatory growth” after the epidemic is over, and said the outbreak in China was under control. Courtesy - Rapaport News

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