Wednesday, October 28, 2020

Rough sales rebound in Sign of recovery

De Beers, the world’s largest supplier of diamonds by value, has fuelled optimism that the industry is recovering from one of its  Diamonds suffer from oversupply, price falls in new era” toughest years, by reporting a ‘reasonably positive trend’. According to Anglo American results, rough diamond sales for De Beers’ third sales cycle of 2016 reflect an improved view as indicated by a slight pick from the previous cycle. 

Based on sight dates provided by the world’s leading diamond company, De Beers, ten sights have been scheduled for this year and as at 11 April 2016, three of them have already taken place.

The rough diamond sales will continue to be recorded consecutively through May to December with the exception of October. Chief Executive officer (CEO) of the De Beers Group Philippe Mellier is quoted as saying, “So far, 2016 has seen significantly stronger rough diamond demand than that experienced at the end of 2015 as the actions taken by the industry continue to have a positive effect. However, we are now moving into a part of the year where rough diamond demand has historically been lower as a result of seasonality, so we continue to adopt a prudent mind-set.”

The third sales cycle recorded a provisional value of US$660 million, reflecting a rise from the US$617 million and US$545 million recorded in the first and second sales cycles of 2016 respectively. Compared to the sales value of US$248 million recorded at the end of 2015, the third sales cycle shows a doubled value, indicating the considerable change. De Beers attributed the change to the positive Christmas season in the US from a retail perspective, citing that “low levels of rough diamond purchases by the midstream in Q4 2015 (last quarter of 2015) and a subsequent reduction in manufacturing saw polished diamond stocks pull through the pipeline.” 

According to the seasonality of main events in the US between January and March, engagements and Valentine’s Day contribute to the optimistic diamond sales, the same trend is also observed between May and mid August with activities such as Mother’s Day and the wedding season (Las Vegas Trade show) and finally between November and December which host Thanksgiving and the Christmas festivities. 

Previous reports on sales values captured a disappointing outlook in which the level of sales was hit significantly with around 20 million carats sold in 2015 down from 33 million carats the year before. In an earlier interview in February, Gareth Mostyn, De Beers’ Chief Financial Officer cited that excess stock at the retail end of the pipeline caused the company to pull back on production levels in anticipation to move through the stock pile. With the recent results, it does appear that the move is bearing fruit.

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