Advanced Search

Weak Demand Weighs on De Beers Sales

Mar 6, 2019 5:13 AM   By Joshua Freedman
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share

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)
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: Bruce Cleaver, De Beers, Joshua Freedman, manufacturers, midstream, mining, rough, Rough Diamonds, rough prices, sightholder, Sightholders
Similar Articles
Rough diamonds De BeersDe Beers Hikes Rough Prices
Jan 17, 2022
De Beers made hefty price increases at its first sight of the year as diamond manufacturers restocked following
Comments: (1)  Add comment Add Comment
Arrange Comments Last to First
Good News for Market
Mar 6, 2019 7:09AM    By Johnson Johnson
this is good for market...will be short of goods and market will be healthy
Twitter Add Comment
© Copyright 1978-2022 by Rapaport USA Inc. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are registered TradeMarks.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.