U.S. 2001 Imports Take a Hit

By Morgan Beard · Editor-in-Chief

U.S. GEM IMPORTS

Source: U.S. Census Bureau

As the U.S. economy went into a tailspin in 2001, the gem industry followed. Total colored stone imports for the year were $567.5 million, down 20 percent from 2000.

This represents the lowest colored gemstone imports figure since 1996, when the country was recovering from the recession of the early '90s. Taken in perspective, gems are faring no worse than the rest of the economy; indicators such as unemployment and consumer confidence also fell to recession-era levels after September 11.

But the boom years of 1998 to 2000 have left their mark on the colored stone trade. Where before the United States was seen as a price-point market, focused on getting cheap goods no matter what the quality, the free-flowing money of the Internet boom allowed consumers to buy finer gems. Although personal budgets have diminished, their taste has not.

Gem dealers said that when wholesale customers were forced to cut their budgets in 2001, they went for smaller stones, not lesser quality. "On a tourmaline, instead of a 10-carat stone they would go for a 5-carat," said Bobbi Flusser of Overland Gems. "But it's the same quality; it has to be the same color."

Emerald remained the most-imported stone to the United States in 2001. Photo by John Parrish.

"The demand was for more of the nicer goods," commented Sam Pouladian of Pouladian Gem Co. "As much of the nicer goods as we could buy, we could sell here [in the United States]."

Although imports were down across the board, gems other than ruby, emerald, and sapphire fared slightly better. The value of those imports fell 14 percent to $213.3 million.

India continued to reign supreme as the top exporter of "other" gems to the United States, supplying $82.3 million — far beyond the number two and three exporters, Hong Kong with $29.1 million and Thailand with $26.8 million. India was also the only country in the top 10 to actually increase its gem exports to the United States in 2001, albeit by a slim 2 percent.

Key to India's success is its gem traders' ability to get goods at the source and then cut and sell the stones cheaply, undercutting other dealers' prices. Indian cutting houses also have a high number of branch offices and associated dealers in the United States, reducing the need for customers to travel overseas.

The two countries that fared the worst in the "other" category were Hong Kong and Brazil, both of which saw the value of their exports to the United States fall by a third in 2001.

In Brazil, miners are being affected by the world economy. "In general when you have a down market, people aren't interested in production as much," noted Robert Van Wagoner of Beija-Flor Gems, who specializes in Brazilian gems. "When the market's down and there's not a lot of buyers [coming to Brazil], the miners don't work."

Hong Kong, however, appears to be suffering from competition with mainland China. Wholesalers from all over the world are having stones cut in China, and as the country opens up, an increasing number are bypassing the Hong Kong middlemen.

The Big Three of ruby, emerald, and sapphire were down a combined 22 percent to $354.2 million. Each of the three fell in value by approximately 20 percent, indicating that the overall market was down rather than demand for a particular stone.

The most-imported stone by value is still emerald, with a value of $141.3 million in 2001. Colombia remains the biggest source of the stone by far, contributing $57.6 million to the total, followed by Israel at $25.8 million.

"Last year there was a lot of supply [from Colombia], all from different mines — La Pita, Coscuez, Chivor," said Pouladian. "There were a lot of nice stones, a lot of color coming out," which led to a greater supply of the higher-quality stones the U.S. market was craving.

Sapphire came in second place with an import value of $122.3 million. Other than a 22 percent drop in the dollar amount, very little changed from 2000: Thailand continued to reign supreme, importing $65.5 million, with Sri Lanka following at $19.9 million.

The Thais' dominance was even more evident in the ruby category, where $43.3 million of the $68.5 million in cut ruby imports came from the Southeast Asian center. However, as with sapphire, little changed from 2000. Even the huge ruby deposits discovered in Madagascar in late 2000 to early 2001 failed to make much of an impact on the big picture.

Despite the serious downturn in the U.S. market at the end of 2001, jewelry consumers remain more sophisticated, especially at the high end. Although prices for finer goods are still reasonable because of the global economy, look for that to change dramatically with a recovery in one or more of the major markets.