De Beers sold $467 million worth of rough diamonds in the eighth cycle, bringing total revenue in the second half of 2020 to more than $900 million.
The results bring De Beers’ total revenue from rough diamonds in the second half of 2020 to more than $900 million.
De Beers chief executive, Bruce Cleaver, said that while the demand increase was encouraging, it was too early to be sure of a sustained recovery in trading conditions.
“We continue to see a steady improvement in demand for rough diamonds in the eighth sales cycle of the year, with cutters and polishers increasing their purchases as retail orders come through ahead of the key holiday season,” Cleaver, said in the statement.
The strong figures are further evidence of improving demand for rough diamonds, according to said BMO analyst Edward Sterck. He warned, however, that there is a significant accumulation of upstream diamond inventories, which could suppress the recovery if liquidated too soon and too quickly.
“Maintaining good diamond prices through the recovery will depend upon the pace at which the inventory is unwound, with De Beers and Alrosa holding the keys to the bulk of this inventory,” Sterck wrote in a note to investors.
The analyst also said the fact De Beers only provided a revenue figure meant it was unable to gauge how prices were trending.
Lower prices, more flexibility
De Beers has continued to implement a more flexible approach to sales during the sixth and seventh sales cycles of the year, as a result of restrictions triggered by the pandemic.
The usual week-long sight holder events have been extended towards near-continuous sales.
It has also cut prices of its stones, sometimes by almost 10% for larger diamonds, in an effort to spark sales.
Before the price reduction, De Beers had made major concessions to their normal sales rules — allowing customers to renege on contracts and view diamonds in alternative locations.
Along with Russia’s Alrosa, the world’s top diamond producer by output, it has also axed supply of roughs to the market, but built up their own stockpiles.
The diamond giant noted that despite ongoing efforts, it expected it would take “some time” to get back to pre-pandemic levels of demand.
De Beers and Alrosa’s view is shared by many in the industry. India, which polishes about 90% of the world’s rough diamonds, expect the slump in exports to be worse this year than in 2008.
Colin Shah, chairman of the Gem & Jewellery Export Promotion Council, told Bloomberg News on Wednesday that overseas sales of cut and polished diamonds may slump 20% to 25% in the year ending March from $18.66 billion last year.
That will push exports to the lowest in data going back to the 2009 fiscal year on the body’s website.
