De Beers rough diamond sales (Global Sightholder Sales and Auction Sales) for the third sales cycle of 2018 (April 9 -13) slowed to a provisional $520 million, an 11% drop year-over-year and an 8% decline from the $563 million in actual sales ($555M provisional) sold in Cycle 2. The drop in sales was not unanticipated after heavy buying early in the year, and unnamed insiders commented last week that De Beers had raised prices between 1 and 2 percent, a similar percentage increase as in its previous sale at the end of February. Some Sightholders claimed certain assortments were downgraded, equating to a de facto price increase, comments Dudu Harari of Bluedax. For the sake of comparison, Russian minining giant ALROSA sold $560 million worth of diamonds in its March sale, saying that there was higher demand for medium and large-size rough stones in the first quarter of the year.
Bruce Cleaver, CEO, De Beers Group, commented: "While the second quarter of the year is traditionally a seasonally slower period, we continued to see good rough diamond demand in the third sales cycle of 2018 as diamond businesses have focused on restocking following healthy consumer demand for diamond jewellery in the US and China."
Commenting on the sight, rough trader Harari writes for Bluedax, "There were fewer goods available for sale to the international market. This is because many Sightholders are obligated to produce goods in their country of origin, such as South Africa Botswana & Namibia. Unsurprisingly, this situation is not popular among manufacturers who argue that the cost of manufacturing and the level of the work is causing losses compared to manufacturing in lower-cost centers such as India and China. However, they have little choice. Either they accept the high manufacturing costs or jeopardize their Sights. Since they stand to lose money manufacturing, many Sightholders prefer to trade their rough rather than dealing with a long and expensive manufacturing and polishing sales process." He adds that the Nirav Modi scandal in India is causing banks to restrict lending, and that less liquidity in the sector could easily cool the market over the next few months. Additionally, "While smaller Sights and a mostly stable polished market are keeping the rough marketplace steady, high polished stock levels and low margins in manufacturing combined with finance restrictions could push prices down."