Russia And Ukraine War that have made Diamond Industry Vulnerable and Uncertain that made diamond prices hike.

The Russian military has launched a full-fledged attack on the Ukrainian territory. Amidst the loss of lives, escalating global tensions, and a black cloud of World War 3 looming over; the global markets have seen a tumble down. As the Russian army progresses with its plan, the world's most prestigious industry- the diamond market fears supply disruptions and a major price hike. 

The February attacks by Russia have placed the Russian mine "Alrosa" under sanctions by the US government. It stops the US businesses from extending credit to the Russian mining company. But the sanction does not prohibit Alrosa from conducting sales. 

Russia's Alrosa produces one-third of the world's diamonds by both volume and value. Also, a better quality of diamonds under 1 carat.  The economic sanctions would certainly affect the diamond supply and prices. Mostly, the price hike would be of rough diamonds. If the diamond suppliers squeeze and keep the prices intact, the major fall would be felt by diamond manufacturers. 
           
Reference:- ft.com           
                                                                                                 
The sanction can also affect the miner's polished diamond business. Under the new regulations, a retailer is prohibited to take polished diamonds or diamond jewellery on memos from Russian suppliers. 

There is yet another dilemma faced by the diamond merchants. Diamond dealers can purchase rough diamonds from Alrosa, but they will be unable to pay them directly. As of now, the Russian banking system has been cut off from the international payment system. The diamond dealers have to do transactions only in Rubel.  Cutting off the Russian supply would create further shortages accompanied by unsustainable price hikes in the long run. 

Diamond manufacturing has already seen a slowdown. Price hikes of rough diamonds have led to a fall in procurement costs, which in turn has resulted in a shortage of polished diamonds. 

The Future of Diamond Industry:
                                                                                                                              
The price hike and subdued supply is one thing, but what about diamond demands? The ever-present Covid-19 fears and an increased rate of interest rates have been joined by the doomed Russian-Ukraine war. 

But what about demand? The war in Ukraine is another element shaking global markets in 2022. High US inflation, the promise of interest rate hikes, and the lingering coronavirus pandemic are already fueling uncertainty and weighing on consumer sentiment. 
                                                                                             
The past year saw an incredible uprise in the diamond prices and supply which were definitely enjoyed by diamond dealers. Given the prevailing conditions, there is a concern that the momentum might come to a halt. 

Demands have seen a plunge with several renowned diamond jewelry houses putting a restriction on sourcing Russian diamonds. If the trend continues, it can have a wider impact on the demands. The demands affected will not just be Russian sourced diamonds but every natural diamond in general. 

As the war continues to put pressure on the diamond market, the future can is uncertain and fragile. Though yet the sales have not been affected, what escalating tensions bring is unknown. 

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