In 2021, the global diamond consumption showed an obvious recovery trend, and the overall income of all links increased significantly year-on-year and exceeded the level in 2019: in 2021, with the resumption of production, economic recovery and terminal consumption in various countries, the diamond mining consumption recovered significantly and exceeded the level before the epidemic in 2019. The upstream rough diamond mining, The year-on-year growth rate of revenue in the three major links of midstream cutting and downstream retail was 62% / 55% / 29% respectively.
The upstream mining link is in short supply, the blank price is + 21% year-on-year, and the blank drill inventory has reached a new low since 2013. In 2021, the upstream miners are expected to achieve a mining volume of 116 million carats, a year-on-year increase of + 5%, a certain recovery from 2020; The total sales volume reached 137 million carats, a year-on-year increase of + 27%. The recovery after the epidemic was significant, the supply was in short supply, the inventory consumption was obvious, and the inventory in the upstream link hit a new low since 2013, only about 29 million carats. Short supply has also driven the growth of overall prices. In 2021, the year-on-year growth rates of blank prices and bare diamond prices reached 21% and 9% respectively. Major diamond miners in the world have also raised prices for many times.
In the midstream segment, India's cutting capacity is saturated and its profit has improved year-on-year: India contracted 90% + cutting and grinding. According to India's GJEPC data, India's rough import in 2021 was about US $17.7 billion, a year-on-year increase of + 84%, and the export of natural diamond bare diamonds was about RMB 23.8 billion, a year-on-year increase of + 46%. India's major cutters are also in a state of capacity saturation, and the profits in the midstream link have improved by 3-5 percentage points year-on-year.
Global terminal retail sales rose by + 29% year-on-year to US $84 billion, and the United States and China have recovered to the epidemic level: global diamond terminal retail sales reached about US $84 billion in 2021, a year-on-year increase of + 29%, a cumulative increase of about 12% compared with 2019 before the epidemic, with a strong recovery. The United States is still the major diamond consuming country, and the recovery in 2021 is also the strongest. The year-on-year growth rate of terminal retail sales reached 38%. The growth rate of retail sales in other major countries in 2021 is also between 15% - 20%. In addition, the diamond consumption in the United States and China in 2021 has recovered to a level higher than that in 2019.
Looking ahead, global diamond consumption will continue to grow in H1 in 2022. Among them, the United States and China may maintain a high boom, and other countries may gradually return to the pre epidemic level. We expect the growth rate of the whole industry to be about 4% - 5% in 2022 under neutral conditions.
Investment suggestions: 1) in 2021, the global diamond demand side consumption recovered significantly, especially in the United States and China, but the mining supply recovered to a certain extent, but far lower than the growth of the demand side. The shortage of supply has led to the upstream price increase. We expect that the global diamond consumption will remain high in 2022, and the gold and jewelry consumption in Chinese Spring Festival will pick up in 2022, It is recommended to pay attention to the potential double-click opportunities brought by the overall sector performance recovery, recommend Chow Tai Seng Jewellery Company Limited(002867) , recommend paying attention to Chow Tai Fook, Guangdong Chj Industry Co.Ltd(002345) , etc. 2) We believe that the price of cultivated diamonds is anchored by natural diamonds and the result of balanced game among consumers, brands and channels. The high consumption of natural diamonds will also stimulate the vigorous development of cultivated diamond industry. Recommend Henan Liliang Diamond Co.Ltd(301071) , pay attention to North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) , etc.
Risk tip: the epidemic situation is repeated, the prosperity of terminal consumption is declining, and the market competition is intensifying
