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The industry was also hurt by Operation Protective Edge, the 50-day war Israel fought with Hamas in the Gaza Strip this summer that led to the cancellation of the International Diamond Week exhibition its organizers had hoped would help revive the industry, especially ahead of the key Christmas season.
“The year 2014 was very difficult for the diamond industry," said Shmuel Mordechai, who heads the Economy Ministry's Diamond, Gemstone and Jewelry Administration. "All the world’s diamond centers reported sharp drops in profitability and, for the first time, sightholders did not buy their full quota over several months of the year.”
Sightholders are bulk purchasers of diamonds authorized by DeBeers, the biggest producer of rough diamonds in the world.
Figures from the Economy Ministry released Monday showed that Israeli exports of polished diamonds reached $6.269 billion last year, an increase of just 0.6% from 2013 and still below the $7 billion in 2008, just before the global recession set in.
Exports of rough and polished diamonds totaled $9.324 billion, compared with $9.166 billion in 2013, a 1.7% increase.
Imports of polished diamonds climbed a faster 4.8%, to $4,514 billion, but imports of rough diamonds edged up just 0.8%, to $40.22 billion, the ministry said.
The United States continued to be the main market for Israel's polished diamonds, taking 38% of all exports, valued at $2.371 billion.
But Hong Kong and, by extension, China, has been catching up, accounting for 29.7%, or $1.864 billion, last year, the ministry said. Other big markets include Belgium (8.5%), Switzerland (6.5%) and Britain (3.7%).
Like the rest of the world industry, Israeli cutters and polishers are suffering from low profitability and difficult credit conditions as prices for rough diamonds have raised prices at a faster pace than retailers have. The Diamond, Gemstone and Jewelry Administration says the industry has to focus on finding cheaper sources of polished diamonds.
Mordechai said he was optimistic about this year, pointing to plans for several exhibitions as well as an international conference of world diamond bourses. Stepped-up marketing efforts will see Israeli diamond companies participating in exhibits in Las Vegas, Hong Kong, India, Thailand and Switzerland this year.
Israel Diamond Institute chairman Moti Ganz told the industry website Rapaport that he was confident the Israeli diamond industry would show growth in 2015 thanks to a robust U.S. market and renewed Asian demand.