The optimism at the beginning of the year regarding improved demand for rough diamonds has shifted to uncertainty following the outbreak of the COVID-19 coronavirus; as expected, De Beers' sales at the second sight of the year took a nosedive, ending at a provisional $355 million. That result is 36% off the pace of their first sale of the year ($551 million) and 28% lower than the $496 earned at the second sight of 2019.
Bruce Cleaver, CEO, De Beers Group, summed up the situation as follows: "Following an improvement in demand for rough diamonds during the first sales cycle of 2020, we recognised the impact of COVID-19 Coronavirus on customers focused on supplying the Chinese market and put in place additional targeted flexibility to enable customers to defer allocations of the relevant rough diamonds." Insiders said that De Beers allowed its sightholders to defer their purchases of goods that produce the types of polished diamonds popular in the Chinese retail market - which has essentially shut down. Since manufacturers cannot move these goods onto the market, being obliged to buy more rough that yields those goods would ratchet up the pressure on them.
'Chinese goods', as they are being referred to, are essentially 1- to 2-carat rough diamonds that yied polished diamonds weighing less than a carat. Demand on the Chinese market is currently highest for diamonds in the 0.30- to 0.50-carat range. Deferring a percentage of their allocation does not release the sightholders from their purchase contract. Instead, they may delay those purchases until the sights during the next few months. Those who already deferred their supply from the last two sales of 2019 will only be able to delay their purchases until the next sight in late March. De Beers has shown itself willing to accommodate is clients' concerns during the second half of last year, offering exceptional levels of flexibility, including letting customers refuse half of the goods in a box or sell up to 30% of their rough purchases back to the miner.