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The world’s biggest diamond producer reportedly slashed prices at its first sale of the year, in a bid to stimulate a flagging market.
DeBeers, majority owned by Anglo American
AAL,
reduced prices by 10% at its first sale of diamonds, Bloomberg reported on Tuesday, citing sources. Some of its larger stones saw cuts of 25%.
A global economic downturn, increasing popularity of lab-grown diamonds and fewer marriages and engagements following the pandemic have weighed on demand for the gems in recent years.
DeBeers announced in December that it expected to sell two-thirds fewer diamonds in the final sales cycles of 2023 than in the same period last year, aimed at reducing a market glut.
It and other gemstone sellers divide the year into a series of five-week sales cycles that correspond to amounts of time it takes for manufacturers to cut and polish the rough diamonds they purchase. DeBeers had previously started limiting its sales in its eighth sales cycle last year as demand fell throughout 2023.
De Beers last year tried to spur some demand by resurfacing a newer version of its classic “A Diamond is Forever” advertising campaign in the U.S. and China.
MarketWatch has reached out to DeBeers for comment.
(Bloomberg) — The world’s two biggest diamond miners are selling stones again after the industry all but halted supplies in a desperate attempt to stop a collapse in prices.
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This year’s rout that was driven by swelling inventories forced the sector to take radical steps to support the market. Russia’s Alrosa PJSC in September halted all sales for two months, and was followed by buyers in India — the dominant cutting and trading center — voluntarily banning imports. De Beers allowed its customers to refuse all gems they’re contracted to buy.
There are now signs that the market is starting to pick up. Alrosa began selling rough diamonds again at the end of November, offloading more than $100 million, according to people familiar with the matter. De Beers, which held its last sale of the year at the start of December, sold a similar amount, said the people, who asked not to be identified as the details are private.
The industry has been whipsawed since the start of the pandemic. It had been one of the great winners as stuck-at-home shoppers turned to diamond jewelry and other luxury purchases. But demand quickly eased as economies reopened, leaving many in the trade holding excess stock that they’d paid too much for.
That cooldown rapidly became a slump as the US, by far the industry’s most important market, wobbled under rising inflation. Plus key growth market China was hit by a property crisis that hurt consumer confidence. And to make things worse, lab-grown diamonds started making big gains in some key markets.
That left the industry with little choice but to choke off supply. Those efforts so far seem to be working, with some price gains for rough diamonds, though concerns still linger that fresh supplies from miners’ large stockpiles could test the recovery.
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Alrosa’s recent sale saw it sell to just a handful of mostly India buyers, the people said. Many in the industry refused to deal with Russian gems following Moscow’s invasion of Ukraine as Western retailers said they didn’t want to buy the stones. Before the war, Alrosa sold to about 50 customers each month.
And while De Beers has resumed sales, it still allowed buyers to reject goods they’re contracted to buy, the people said. The unit of Anglo American Plc has a long history of managing supply by stockpiling goods to prevent prices falling.
De Beers and Alrosa declined to comment.
India’s diamond industry earlier this month also announced that it would lift the voluntary ban on imports on expectation that demand will recover and prices of polished items to stabilize.
The miners’ sales have been small compared with what the dominant producers usually expect to sell at this time of year. The rebound has also been driven by buyers who are short of stones and need new supplies to keep factories open, rather than strong demand for polished gems, the people said.
A more lasting recovery will demand on how robust jewelry sales are during the crucial holiday season, which spans from Thanksgiving to the Chinese New Year.
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