There is panic among people due to the outbreak of coronavirus (COVID-19), and as a precautionary measure, State governments have directed large retail outlets to close down. Malls, theaters and other crowded places have been temporarily closed until April 30th for now, placing curbs on public gatherings. Most people are only venturing out to buy essential commodities
With customers largely staying indoors amid the outbreak of the virus, most of the large organized jewelers in the country are planning to stay closed until the end of this month. The sapphire gem and jewelry industry are predominantly wedding driven. But due to coronavirus, most such events are being canceled. That has driven the wedding shopping to a halt. Retailers are managing to do only 20-25 percent business due to fewer foot traffic amid fear of the virus, spread. However some online websites, especially in the engagement ring market, have seen steady sales, we think the reason for this is due to confined together coupled with some websites offering incentives has made this is a good time to buy in the safety of your own home your dream engagement ring for lower than normal prices.
The Pandemic’s Impact on Global Gem Rates
The pandemic continues to hit markets and commodity prices on a daily basis. Uncertainty over how the virus may impact sapphire demand and supply in 2020 increases every day. After plummeting together with markets on the worst day Wall Street has seen since 1987, Sapphire prices continued to trend strongly with the mines and markets closed across Asia, Australia, Madagascar and Sri Lanka making these elusive gems becoming scarcer.
How are Miners in third World Countries Coping?
Miners have taken precautions in an effort to prevent a further spread of the coronavirus. Sri Lankan mining companies are bracing for a heavy hit from the country’s looming nationwide lock-down to slow the spread of the coronavirus, warning of an expected leap in sapphire costs in addition to their lost output. A leading producer of gems and minerals such as Ceylon sapphires, Sri Lanka’s labor-intensive mining industry will remain closed for several months creating a shortage for Ceylon sapphires with prices predicted to increase when mining resumes later in the year.
We already started to see prices on some loose stones increase but with the US dollar staying strong we hope this will help balance the price per carat for these sapphires to keep prices down for new sapphire engagement rings once the mining restarts.
While the coronavirus carries on the spreading through places like Sri Lanka & Madagascar mines will have to be put on care and maintenance, which means operations would stop but the mines are kept in a condition to reopen in near future. The lockdown would not only result in some major capital expenditure needed to re-open certain deep-level shaft mines, it also goes without saying that the shutdown would “negatively impact” annual production of sapphires. There are also marginal and loss-making mines that would likely be unable to re-open should they be required to close fully, without remedial measures. Due to this, the Sri Lankan government has said it was exploring what would be required to prevent permanent damage of their sapphire and gem sector which account for approx 15% of Sri Lanka’s GDP.
Even though large jewelry companies have enough liquidity to withstand an interruption to operations for a small period of time everyone is looking towards minimizing the impact of Covid-19 on their operations. This is an unrepresented time in the history of the mining industry and our country, and even though it is hurting business, responsible sapphire dealers have said they would comply with government measures to slow down the spread on Covid-19.
The Entire Global Economy in Shambles
Sudden stops in economic activity, caused by lock-downs and other quarantine measures, have the potential to create longer-term disruptions to global productivity (supply chains and otherwise) well after the actual viral outbreak is brought under control.
In addition, crashing oil prices, a result of a general slowing of global economic activity due to the virus but also compounded by the recently ineffective attempt led by OPEC and Russia to limit supply, further pressures the unraveling global economic situation.
While lower oil prices will provide somewhat of a stimulus to consumers and also benefit some industries, such as sapphire mining, given the size of the global oil &, gas industry, a 40% drop in the price of crude oil (in just two weeks) undoubtedly distresses government budgets and global credit markets. The eventual burden of this will fall on sovereign and commercial petrol-nations, including much of the Middle East, Russia, Canada, the Nordic countries and certain U.S states.
Governments Scrambling to Find A Solution
While governments around the world have provided massive liquidity to financial centers in recent days, markets are not responding favorably, which is creating additional fear that central banks do not have the power to rescue financial markets as they have in the past. The S & , P 500, a proxy for the U.S. stock market, is down over 15% since the U.S. Federal Reserve Bank provided an emergency 0.5% interest rate cut on March 3 followed by 2 trillion dollars by the US government to help maintain the loss for both small business owners as well as the loss of jobs across the United States.
The Current Situation
China currently accounts for approximately 15% of global sapphire jewelry demand with the USA the highest buyers of sapphires at 30%, but like the rest of the world also implements measures to restrict contraction of the virus, consumers in the industry’s other key markets will undoubtedly avoid public spaces, like shopping malls. Larger jewelry chains are reporting a drop in sales why others offering special sale prices have seen steady sales over the last 3 to 4 weeks especially in the sapphire engagement ring market. Much of this we think is the concern that sapphire prices once the mines open might rise while others have taken advantage of sale prices for sapphire jewelry.
There is hope at the end of the tunnel
The consumer demand for natural sapphires, in the end, will also likely have a knock-on effect on the industry supply-chain inventory levels. However, the sapphire industry does have a history of being somewhat resilient during times of crisis, and there is no doubt that once this is all over, jewelers would once again be able to get back on their feet stronger than ever.
If you are considering buying a sapphire engagement ring, companies like Sapphire Ring Company with their wholesale pricing are one of the best places to start, open 24/7 you can choose from 100’s Ceylon sapphire rings most set into platinum and diamond settings certified by the GIA.