The De Beers Group provisionally sold $475 million worth of rough diamonds during their eighth sales cycle (October 8-12) of 2018, representing the lowest value of sales at a sight this year. October sales fell by about 6% compared to Sight 7 after the actual September sales were revised down to $503 million from the provisional value reported last month at $530 million. Still, the recent sight is a significant, 26% improvement in comparison to the $376 million in rough sales achieved at Sight 8 in 2017.
Independent analyst Paul Zimnisky estimates by 2035, lab-grown diamond jewelry will achieve total sales $15 billion, as it grows from its current estimated level of estimated $1.9 billion. He bases his estimate on growth of 22% annually to $5.2 billion by 2023 and to $14.9 billion by 2035, equating to a longer-term growth rate of about 9% rate annually. In terms of market share, his research leads him to conclude that lab-grown jewelry will have gained 5% of the market for diamond jewelry (>$250) and 7% for fashion jewelry (<$250) in the same timeframe.
De Beers Group and parent company Anglo American announced rough diamond production for Q4 2017 increased five percent to 8.1 million carats from 7.7 million carats, bringing their annual production to 33.4 million carats, a 22% increase over 2016 (27.3m ct). They say the fourth-quarter rise reflects stronger trading conditions as well as the contribution from the ramp-up of Gahcho Kué in Canada, where production doubled to 993,000 carats due to the ramp-up of the mine, which reached nameplate capacity in Q2 2017. Q3 production, however, was notably higher at 9.2 million carats.
According to preliminary figures released today, ALROSA’s rough and polished diamond sales for the year 2017 amounted to US$4.27 billion, a 5% decline from the US$4.49 billion in overall sales in 2016 despite an estimated 5% increase in rough diamond production. The Russian mining giant provisionally sold $4.17 billion in rough diamonds compared to $4.34 billion in 2016. They sold US$96.9 million in polished diamonds on the year.
In ABN AMRO's lastest iteration of the biannual Diamond Market Outlook, Coordinator FX & Precious Metals Strategy Georgette Boele writes, "The recovery in the diamond trade has grinded to a halt at the start of 2017", as US consumer spending has been disappointing in Q1, lower consumption in Hong Kong and Macau has negatively affected demand (according to company reports from main jewelers in the region) and Chinese retail sales were weaker in January and February.
Ashley Davis of National Jeweler reports from JCK Las Vegas on the findings of a survey conducted by WeddingWire, an online wedding marketplace: essentially there seems to be a disconnect between the buyer and the receiver regarding the criteria modern couples use to shop for engagement rings. The proposer’s main concern is the quality of the stone, as the focus is on enduring value; the receiver valued the design and setting above all else, with quality and size ranking fifth and sixth respectively.
Stéphane Fischler, President of the International Diamond Council, founding member of the European Council of Diamond Manufacturers, Vice President of the World Diamond Council and President of the Antwerp World Diamond Centre talks to Manisha Gupta on India's CNBC-TV18. He shared his view of the Indian diamond industry and the road ahead for its diamond market. An abbreviated version:
CNBC: How do you see diamond consumption growth in India?
The De Beers Group of Companies has announced the (provisional) value of rough diamond sales (Global Sightholder Sales and Auction Sales) for the second sales cycle of 2017 has earned $545 million. This represents a 25% dropoff from the $729 million achieved in Cycle 1, and is nearly 12% lower than in Cycle 2 2016, which earned $617 million. Nonetheless, excluding January 2017, it is the largest sales cycle since September of 2016.
Reflecting on the impact of the Trump election victory on the future of the diamond trade, particularly on the U.S. and India, independent industry consultant Pranay Narvekar writes in GJEPC's Solitaire International that America's share of the global polished diamond market - already the highest by far at 45% of total value - should only increase in the coming years, while the strength of the dollar and other expected policy moves will only exacerbate uncertainty throughout the trade.
The diamond market has been going through difficult times for a while now, but diamond trade data paint a far more optimistic picture than in June, signalling that trade has turned the corner, writes Georgette Boele of ABN Amro in their "Insights" report. Back in June when ABN last published their diamond insights report, Boele still doubted if global diamond trade would improve, but trade data have clearly improved in all centres, most noticeably in Antwerp, Israel and India.
Two investment bubbles, 340 years apart, provide living proof of Edmund Burke’s famous observation that those who do not know history are doomed to repeat it. Rough diamond broker and founder and president of N.Rothmann, Nurit Rothmann recounts the history of two remarkably similar speculative bubbles: the spectactular rise and sudden collapse of the tulip market in 1637 and the rough diamond market in the late 1970's and early '80s. Reprinted here by special arrangement.
De Beers today published its "Diamond Insight Report 2016", leading off with the following: "De Beers first published its Diamond Insight Report in 2014. In the two years since, much has changed, but the strong diamond industry fundamentals remain the same." Nonetheless, 'With the first half of 2016 showing signs of more stable conditions returning, it is clear that volatility in the diamond sector is not a short-term phenomenon, but the new normal," says CEO Bruce Cleaver.
Russian miner ALROSA has started selling rough and polished diamonds in Vladivostok in Russia's Far East, said Yuri Okoemov, vice president of ALROSA, at a Eurasian Diamond Centre presentation. "I do not think that initially there will be high volumes (of sales). At the beginning, sales will amount to $7 million-$8 million, but the overall potential of the region is larger. We will create diamond cutting and processing facilities. Our task is to, at least, double the amount of diamond sales in the region by 2018," he said.
Diamond industry analyst Avi Krawitz presents his rundown of the India International Jewellery Show (IIJS) that took place last week in Mumbai. While noting that IIJS is currently a niche domestic show focusing on gold jewelry - which saw steady business, with jewelers expecting demand to rise along with gold's upward trend - Krawitz sensed optimism about the diamond market even though domestic diamond consumption has slowed recently. "India’s jewelry industry has some hurdles to climb before the diamond trade can grow domestic supply [and demand - DL].
According to a press release from Anglo American, De Beers' underlying EBIT (earnings before interest and taxes) for the first half of 2016 increased by 2% to $585 million (H1 2015: $576 million). "This was the result of higher revenues from stronger rough diamond demand, tight operating cost control and favorable exchange rates," reads the statement. Consolidated unit costs declined from $82/carat to $65/carat as a result of cost-saving programs and portfolio changes, supported by favorable exchange rate movements.
Citing a Morgan Stanley & Co. International research report, JCK's Rob Bates writes that synthetic diamonds pose a threat to the diamond industry, in particular to the prices of small 'melee' diamonds, and could turn out to be, “a serious potential disruptor” to the established diamond market.
The Diamond Investment and Intelligence Center (DIIC) takes a look at the tactics of auction houses for promoting unique and high-end diamonds - particularly Fancy Color Diamonds - to maximize their value at auction. How do they attract their clients and what happens when, as we saw with the Lesedi La Rona just this week, a diamond fails to sell.
Following the January report “Diamond Sector Outlook: Nothing is forever, ABN AMRO released a new report on the global diamond industry’s outlook for supply and demand and rough and polished prices. ABN AMRO analysts believe trade figures of the main trading and manufacturing centres point to a “fragile improvement”, with "import and export figures in Antwerp bottoming out, the UAE appears to be stabilizing while Israel remains very weak.”
Drawing a worrying analogy between the film The Big Short (2015) - which depicts how everyone took part in the ultimately disastrous play on U.S. subprime mortgages even though the fundamental truth was, or should have been, known to those familiar with the mortgage market - and the current trend in the diamond market, Ehud Arye Laniado issues a warning about ignoring the lessons learned as a result of the diamond downturn of 2015.
JCK News director Rob Bates looks at the effect Brexit might have on the diamond and jewelry industry. Bates identifies five potential impact areas. First of all, the vote to exit the EU increases uncertainty and volatility, especially on the financial market, and that is bad news for everybody. Secondly, gold prices are expected to go up, as investors consider it a safe haven amidst the financial turmoil.
Polished markets cautious. Hong Kong show begins with low expectations for Chinese demand after relatively weak JCK Las Vegas show. Prices stable at De Beers sight with boxes selling at mid-single-digit premiums amid concerns that rough market fails to reflect sluggish polished demand. Manufacturing steady.
In an in-depth analysis of the market for Rough&Polished, analyst Elena Levina says that despite lower reported trade figures in March, three consecutive months of growth indicate the industry seems to have regained balance.
Levina says polished prices, in certain categories, went up, as did the average rough price per carat, while at the same time, the big producers are said to have maintained the prices they instated last year. Industry sources, Levina continues, are saying that this price stability is again allowing the secondary market to trade at significant premiums.
The CEO Magazine sat down with William Lamb, CEO of Lucara Diamond Corp. - finder of the 1,111-carat Lesedi La Rona diamond at the Karowe Mine in Botswana - to talk about steering the development of the small miner with the big stones. Lucara’s acquisition of the Karowe Mine presented a major growth opportunity for the company.
What we are seeing is a group of manufacturers buying enormous amounts of rough at very high and unprofitable prices, which will yield less than needed polished, using credit they may have difficulty paying off because the prices they’ll be able to achieve for the polished can only be low… What better definition for the circumstances that lead to a market to peril. Do you feel this is sustainable? Isn’t it our experience that when rough is purchased in (overall) large quantities with high premiums, the miners raise prices?
Diamond industry analyst Ehud Laniado performs a thorough analysis of current rough diamond supply and polished demand, noting a clear trend toward the same oversupply of rough and minimal profitability that undermined the industry in 2015.
Rapaport's "Weekly Market Comment", sums up the current mood of the diamond market as follows: "Polished prices [are] firm, market mood [is] much better and rough demand [is] improving due to polished shortages. Manufacturing [is] still at about 30% below capacity. We advise caution as current market prices are based on shortages created by artificial rough prices that are higher than resultant polished. Rough market volatility expected in 1H as miners reduce prices to increase revenue." Meanwhile, with the Chinese New Year right around the corner (Feb.
Vocalizing what many in the industry have been whispering in the corridors, jeweler and diamond industry blogger Mel Moss says that the current adversity facing the diamond industry - i.e., the miners and manufacturers - could serve as a catalyst for positive changes, provided a change of attitude. "These sectors need to realise that the diamond industry is a separate entity from the jewelry industry. The predominant attitude among diamantaires is that diamonds are the focus of all jewelry. The truth is that the diamond industry is dependent on the jewelry industry...not vise versa!
According to Credit Suisse, diamond producers and their clients, the processors and jewelers, have made a massive miscalculation. Around two years ago, everyone in the industry expected that diamond demand would boom between 2013 and 2015, and so cutters & polishers kept ordering while miners kept up production to meet anticipated demand. Instead, their market was hit by a slowdown in luxury spending, a crackdown on Chinese corruption and anaemic global growth, writes Business Insider.
Thomas Biesheuvel at Bloomberg writes that, "More than half of the biggest diamonds in the past decade have been found in the last two years," and Canadian miner Lucara Diamond Corp. unearthed three of them just last month from its Karowe Mine in Botswana. Still, of the hundreds of millions of diamonds unearthed over the past decade, only about a dozen larger than 250 carats have been found, based on a Bloomberg review of company disclosures.
As 2015 Comes to an end, diamantaire Ehud Laniado sums up the year and discusses the main issues of relevance for the diamond trade, including transparency, financing, marketing, synthetic stones and pricing. He states that, "Financing and cash flow are among the most important issues we will have to address in the coming year. This goes far beyond transparency.
From polishedprices Weekly Market Report: Traders reported some last minute orders in the run up to Christmas in the main US market. In Asia, all hopes are on the next big sales season during the Chinese New Year next month. In the wider market, traders said tight supplies in certain areas was driving up prices.“Polished is reacting to shortages in certain items,” said one trader. “These are moving with higher prices, but are well made goods only,” he said. In lower quality polished, inventory levels remain high.
At least 200 workers were rendered jobless after a diamond unit owner was forced to close his factory due to the financial crisis and weak market conditions. This is the first incident of a diamond unit closing down post-Diwali vacation. Pre-Diwali, around 350 small diamond units had shut down in Surat rendering over 20,000 workers jobless. The closure of Sai Impex, owned by Mahesh Thesiya at Swaminarayan Nagar at Varacha, has rendered 200 diamond workers jobless. Industry sources said around 15% of the diamond units in the city have yet to reopen, even as Diwali vacation is over.
Rob Bates of JCK takes an insightful look into the troubles that have plagued the diamond industry in the second half of 2015, and analyses the internal bickering that has resulted. Only a short time ago, De Beers was the crown jewel in the tarnished Anglo American crown, but now, at the end of 2015, the bottom has fallen out of the diamond business. De Beers’ second-half sales will likely come in at $1.2 billion–$1.3 billion, a 30-year low.
Oleg Petrov will start in the new position as of today (November 16). The USO is the ALROSA division responsible for sorting, valuation, pre-sale preparation and sale of diamonds. Petrov joined ALROSA in September as adviser to the company’s president. Before that, he was sales and marketing director at PJSC Uralkali, responsible for sales and exports from the Russian Federation, and logistics and financing.
The scuttlebutt surrounding De Beers' multi-tiered pricing mechanism and sweetheart deals for select sightholders at its October sight is nearly certain to shake up the rough diamond market and may potentially ignite a price war, writes Chaim Even-Zohar in his latest Diamond Intelligence Briefing, even though he acknowledges that this would be "self-defeating".
Rio Tinto will cut back its production of diamonds this year and focus on bringing more affordable jewellery to the Chinese market as ample supply and waning demand for the precious gemstones weigh on prices, writes Financial Review. The miner announced on Friday it would "pause final product processing in the fourth quarter at Argyle in light of current market conditions" and now expects to produce 18 million carats this year, down from its previous estimate of 20 million.
Recapping an alltogether difficult and unusual year, the coming holiday season will be an important yardstick to determine where the diamond industry is heading, Rapaport analyst Avi Krawitz says. The stable but modest growth in the US market, turmoil on the stock markets and the continued pressure on the Chinese market - expectations for China's Golden Week sales results are low - don't call for optimism.
In his latest blog, industry analyst Edahn Golan, considering the upward trend in US Jewelry retail sales with August the 4th consecutive month of record sales, calls for cautious optimism for the global diamond industry. Cautious, because the increased sales aren't felt by the midstream just yet, as large inventories, falling stock markets and turmoil on the commodities market still loom, probably for some time to come, Golan says. Furthermore, Golan believes the renewed consumer interest could be explained by the price consumers are paying for jewelry.