Despite the extreme challenges presented by a ‘perfect storm’ of problems during 2015 which presented a variety of challenges for the sector as a number of unexpected issues came to pass at the same time which led to a situation of "inventory indigestion", it was encouraging to see how swiftly and decisively the diamond industry was able to respond and positive results are already being seen, De Beers CEO Philippe Mellier said in a bankers' briefing delivered in Mumbai. He commented that De Beers took a number of steps to help support profitability, downstream demand, midstream confidence and supply responsibility. Consequently, "we are already experiencing the benefits of the actions we took at the end of last year. Our first two sales cycles of the year have seen our rough diamond sales bounce back to much healthier levels, indicating potential for better industry conditions in the year ahead. As we saw a positive end of year consumer selling season in the U.S., retailers have shown greater appetite to restock at the start of 2016 and polished diamond prices have begun to firm up. This improvement has been rapid, and is testament to the industry’s capacity to take control of its destiny in difficult times."
He said that providing increased financial transparency and reducing "the historical opacity of the broader diamond industry by publishing more data on upstream production, midstream sales and downstream demand: is providing more clarity for investors upon which to make decisions. He commented that diamonds have "a compelling long-term demand opportunity" as the middle classes continue to grow in the emerging markets, disposable incomes rise quickly, and more diamond jewelry retailers meet greater demand from a larger number of consumers adopting the culture of giving diamond jewelry for milestone events.
Although Chinese growth rates have slowed due to macroeconomic pressures, the U.S. market for diamond jewelry continues to grow fast. "And as the industry begins once again to increase its investment in advertising, there is an excellent opportunity to win back share of wallet from other luxury products that have advertised more heavily in the recent past."
On the supply side, while rough diamond production is forecast to flatten out and then decline in the coming decade, Mellier said De Beers' investments to extend our production capacity "will leave our customers very well placed to take advantage of the sector’s positive fundamentals over the next decade and beyond."