Diamonds
From IntFX
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[edit] Diamonds
Diamond is the allotrope of carbon where the carbon atoms are arranged in an isometric-hexoctahedral crystal lattice. Its hardness and high dispersion of light make it useful for industrial applications and jewelry. It is the hardest known natural material and the third-hardest known material after aggregated diamond nanorods and ultrahard fullerite.
Material properties:
- Hardness: Diamond is the hardest natural material known to humankind. It has a hardness of 10 (hardest) on Mohs scale of mineral hardness.
- Electrical conductivity: Some blue diamonds are natural semiconductors
- Toughness: The toughness of natural diamond has been measured as 3.4 MN m-3/2,[10] which is good compared to other gemstones, but poor compared to most engineering materials.
- Color: Diamonds can occur in nearly any color, though yellow and brown are by far the most common.
- Identification: Diamonds can be identified via their high thermal conductivity.
[edit] General uses
The diamond industry can be broadly separated into two basically distinct categories: one dealing with gem-grade diamonds and another for industrial-grade diamonds:
Gem diamond industry: Unlike precious metals such as gold or platinum, gem diamonds do not trade as a commodity: there is a substantial mark-up in the sale of diamonds, and there is not a very active market for resale of diamonds.
Industrial diamond industry: The dominant industrial use of diamond is in cutting, drilling, grinding, and polishing. Most uses of diamonds in these technologies do not require large diamonds; in fact, most diamonds that are gem-quality except for their small size, can find an industrial use. Diamonds are embedded in drill tips or saw blades, or ground into a powder for use in grinding and polishing applications. Specialized applications include use in laboratories as containment for high pressure experiments (see diamond anvil), high-performance bearings, and limited use in specialized windows.
[edit] Pricing structure
The Price of a diamond is based on color, clarity, carat weight, cut, certification and seller markup characteristics. It is important to remember that since there is a limited supply of large high quality diamonds, rarity drives the cost equation. The basic variables that determine quality, value and prices of loose diamonds are-
- Cut - The beauty of a diamond resides not only in a favorable body color, but more importantly in its optical properties
- Color - Most commercially available diamonds are classified by color, or more appropriately, the lack of color
- Clarity - The clarity of a diamond is determined by the number, location and type of inclusions it contains
- Carat Weight - The weight of diamonds, and all other gemstones, is measured in carats
- Table Width - Table width is quoted as a percentage of the average width of the diamond's girdle
- Total Depth - The total depth percentage is greatly responsible for the amount of brilliance that a diamond will display
- Pavilion - The pavilion is the bottom portion of the diamond
- Culet - The point on the bottom of a diamond's pavilion is called a culet
- Fluorescence - Roughly one third of diamonds available in the market fluoresce
- Symmetry - Symmetry is graded as Excellent, Very Good, Good, Fair or Poor on a GIA report
- Polish - Polish is graded the same way as symmetry: Excellent, Very Good, Good, Fair or Poor on a GIA report.[1]
[edit] Current consumption trends
World demand for diamond grit and powder will continue growing. Demand for synthetic diamond grit and powder is expected to remain greater than for natural diamond material. Constant-dollar prices of synthetic diamond products probably will continue to decline as production technology becomes more cost effective; the decline is even more likely if competition from low-cost producers in China and Russia continues increasing.
China and India are likely to be the two most important growth markets for diamonds for which De Beers predicts annual growth of 7%. Demand of diamonds is expected to outpace supply by 2008/09. Unless new significant mines come into production in the next few years the gap between supply and demand of diamonds is steadily growing. [2]
[edit] Price forecasts
Diamond demand could rise by at least 50% by 2012, to $14 billion. The Sunday Times of London reported diamond industry analyst James Picton, WH Ireland, was slated to give that warning to an international diamond conference on May 23 at the London stockbroker Hargrave Hale. Picton also said the market could face a $3 billion supply shortage by the same year. As a result, prices for rough diamonds will go up by at least 30%, predicted Picton.[3]
Former top-rated diamond analyst James Allan, now a partner at consultancy firm Allan Hochreiter, expects 5% across-the-board price increases, he too highlighting the supply shortfall and saying that prices are likely to reflect this.Blom notes that world number-one supplier De Beers has already upped prices by 3,5% across the board this year, which is expected to be an industry precedent. Continued junior diamond listings signify a strong market for diamonds. Allan notes the likelihood of a slowdown in demand from the US because of negative news on growth and jobs, but increasing demand from India, China and the Middle East is poised to offset this.
Currently the US accounts for 55% of global diamond jewellery sales, but Blom says that Indian and Chinese consumption is becoming increasingly important. While not close to the US currently, Blom has "no doubt" that Chinese and Indian demand will reach US levels in time. Polished Prices forecasts a "reasonably strong year", putting the average price rise over 2007 at 7%. [4]
[edit] Major producers
World production of natural rough diamonds in 2006 was estimated at 163 million carats valued at $12.9 billion. Of this, Canada's three mines supplied about 11% by value, which should rise to 14% by 2009.
The construction of mines isn't keeping pace with demand fuelled by a growing world economy. There is not enough supply coming up within the next 5 to 10 years to meet the demand just based on GDP growth.
An estimated 10 million people globally are directly or indirectly supported by the diamond industry.[5]
