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Weak Demand Weighs on De Beers Sales
Mar 6, 2019 5:13 AM
By Joshua Freedman
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RAPAPORT... De Beers’ sales fell for the second consecutive month, as
high rough prices and slim midstream profits softened demand from buyers,
sightholders reported.
Sales of $490 million in February were 13% below a
year ago amid weak interest in lower-value goods, the miner said Tuesday. De Beers mainly
kept prices steady, prompting concerns from clients, many of whom had been
hoping the company would make adjustments to ease pressure on the market.
“Prices should have gone down, because the margins are not
there for the manufacturers, but still they were quite firm,” an India-based
sightholder told Rapaport News. “Already it’s been almost one year that
it’s been difficult to make money. That’s not just with us, but with most
[cutting firms].”
Instead of reducing prices, De Beers held back goods, aiming to deal with an oversupply problem in the polished sector, another sightholder explained. The final sale total was surprisingly high, he noted.
The miner hasn’t brought prices
down significantly since November, when it discounted its cheaper goods as tight Indian liquidity affected demand. However, since then, polished prices for melee with VS
clarity and below have fallen 15% to 20%, while prices of some higher-clarity small goods
have declined 5% to 8%, the sightholder noted.
“They feel that with less rough going into the pipeline, if
polished picks up a bit, shortages will arise, and things will just carry on,
back to where they were [before the market became bad],” the dealer said. That approach, however, is unlikely to help manufacturers make good profits, as the market is worse than De Beers thinks, he argued.
The rough market has been weak since the start of the year
as disappointing holiday retail sales led to slower-than-usual restocking. That
has hit De Beers’ top line, with rough-diamond revenues down 20% to $990
million in the first two sales of this year, according to Rapaport calculations.
January proceeds slid 26% to $500 million, restated from an earlier figure of $505
million.
“Demand for rough diamonds remained consistent during the
second sales cycle of 2019,” De Beers CEO Bruce Cleaver said. “While overall
demand for lower-value rough diamonds remains subdued, we did see an increase
in demand from India as factories begin to restock.” The company declined to
comment on prices.
Image: Kimberlite ore on a conveyor belt at De Beers’ Venetia mine in South Africa. (De Beers)
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Tags:
Bruce Cleaver, De Beers, Joshua Freedman, manufacturers, midstream, mining, rough, Rough Diamonds, rough prices, sightholder, Sightholders
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Good News for Market
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Mar 6, 2019 7:09AM
By Johnson Johnson
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this is good for market...will be short of goods and market will be healthy
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