De Beers Rough Sales Pick Up at Final Sight of 2018

Rough Market
19/12/2018 11:31

De Beers reversed a four-month trend of declining rough diamond sales at the final sight of 2018, as the miner sold $540 million of rough goods in its December cycle. The company attributed the increase in sales to the restarting of Indian manufacturing units after the Diwali holiday, when factories close for several weeks, and the spike in demand precipitated by the crucial holiday season and in anticipation of the need for replenished stocks in January.

Rough sales increased by 22% over Cycle 9 revenues, which at $442 million marked the lowest sales cycle of the year, and rose by 19% compared to the same period a year ago when the company sold $455 million. “De Beers Group’s rough diamond sales during the final cycle of the year continued to be in line with expectation ahead of the all-important retail selling season," said Bruce Cleaver, CEO, De Beers Group, "as cutting and polishing factories in India restarted their operations following the Diwali holiday.” Rapaport News estimates De Beers' rough diamond sales for the year as approximately $5.4 billion, which would be a 7% decline from the  $5.8 billion sold in 2017 and an 11% decline from the $6.1 billion sold in 2016.

While the increase in sales during the final cycle is a welcome sign, at least one commentator doubts that sentiment in the industry has turned positive, and the manufacturers are suffering. Dudu Harari of diamond broker Bluedax said in a report on the sight, "Premiums on boxes in the secondary market continue to be low and the biggest issue in the market is simple - there are simply no margins in manufacturing. Combine this situation with a strong dollar, at least compared to Asian currency, tight credit policies from the banking sector, and weak polished sales and it’s a sure recipe for losses and bankruptcy. Unfortunately, we’re seeing companies go out of business on a weekly basis."