De Beers Reports Weak Rough Diamond Sales in May

Rough Market
21/05/2019 10:13

De Beers' rough diamond sales in May were (provisionally) $415 million, making sight number four of 2019 the lowest-earning sight of the year to date, the smallest since the October 2017 sight ($370 million, Cycle 8) and the lowest for a May sale since the miner first released sales data in 2016. The $415 million in reported sales represents a 25% decline from sales in Cycle 4 2018 ($554 million). The company cited macroeconomic challenges and a seasonal decline in demand for rough diamonds to manufacture as weighing down sales at the sight.

Bruce Cleaver, CEO, De Beers Group, commented: "Cycle four saw lower rough diamond sales against a backdrop of macroeconomic uncertainty, and as we enter a seasonally slower period for the industry with Indian factories closing temporarily for the traditional holiday period." Given that the traditional holiday period does not begin until October, its seems early to cite closures of manufacturing units as a factor, but Gujarat Diamond Workers Union (GDWU) has claimed that a majority of diamond manufacturing units has announced a fifteen-day summer vacation, in addition to tens of thousands of polishers already out of work. Clearly, a significant slowdown in manufacturing has lowered demand for rough diamonds at this point in time. 

For the year to date, De Beers' rough sales sit at $1.985 billion, which is 14% lower than its earnings through the first four cycles of last year. De Beers’s first-quarter production fell by 8% to 7.9 million carats, a decline the company said was largely a result of the switch to underground mining at the $2bn Venetia operation in South Africa. in the first quarter of the year it sold 7.5-million carats in two sales compared with 8.8-million carats in two sales events in the same period a year earlier “as overall demand for low-value rough diamonds remained subdued in the quarter.”