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Analyst Warns of Rough Price Pressure
Nov 21, 2016 12:03 PM
By Rapaport News
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RAPAPORT... New diamond mines may force rough prices down next year because
of increased supply, according to Panmure Gordon.
Three mines in Canada will enter the rough market early next
year: Firestone Diamonds’ Liqhobong mine, Stornoway Diamond Corporation’s
Renard mine and the Gahcho Kué deposit, owned by De Beers and Mountain Province
Diamonds. The projects are estimated to
produce about 7.1 million carats per year combined.
Coupled with rough producers’ revised output plans across
the industry and other mine expansions, global production in 2017 may jump 2.5
percent to 130 million carats, analyst Kieron Hodgson predicted.
“The risk for rough prices to be repriced lower because of
the increasing supply is higher than at any time in the last 24 months, in the
absence of a commensurate decline in supplies from existing
producers,” Hodgson wrote in a research note.
Even so, the bank predicted rough prices will fall 5 percent
this year and recover by the same proportion in 2017, assuming sales are
stronger this holiday season. But the increased production will take its toll
should revenues falter between Diwali and Chinese New Year.
“With the new production coming on in early 2017, there may
be certain categories that come under pressure, such as lower-value, commercial
goods,” Hodgson said, explaining that lower-value rough diamonds are more
susceptible to price declines because they are more vulnerable to the impact of
synthetics.
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Tags:
C-Cut, Chinese New Year, Cullinan Mine, De Beers, Diwali, Gahcho Kué, holiday season, Kieron Hodgson, Liqhobong mine, Mountain Province Diamonds., Panmure Gordon, prices, Rapaport News, renard, rough prices, Rough Production, South Africa, Stornoway Diamond Corporation
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