De Beers, the world’s top diamond producer by value, expects the current global downturn in rough diamond sales to subside soon, a development that could be aided by the upcoming holiday season.
Traditionally, De Beers’ peak season each year runs around the Thanksgiving and Chinese New Year period, a stretch that also includes Christmas.
De Beers’ sightholders, the group of buyers with exclusive access to the diamond giant’s rough diamond auctions, traditionally increase their uptake to stock up polished jewellery for the holiday season.
De Beers, which owns 50% of Debswana alongside government, has thus far had a difficult year, with year-to-date sales of $3.21 billion compared to $5.39 billion by the same time in 2018.
The trouble stems from 2017, when the diamond cutting and polishing firms, raising inventories and reducing their appetite for new sales, took up high levels of smaller stones.
The firms have also faced difficulties accessing finance from banks to take up their allotments at De Beers’ auctions. De Beers’ Diamond Insight Report released on Monday indicates that the diamond giant is banking on reduced production and stable polished demand, to eventually pull rough sales out
“Midstream sentiment has been low during 2019 so far, after beginning the year with this oversupply of smaller sized polished (stones),” the group said. “Conditions remained unfavourable due to the absence of strong retailer demand, which has been seen historically at the start of the year.
“We expect retail demand pull-through to rebalance the market in due course.”
De Beers added: “A slowdown in upstream rough diamond production and stable downstream consumer demand should together start to alleviate the H1-2019 supply-demand imbalance”.
Global consumer demand for diamonds was estimated at about $80 billion last year and De Beers will be hoping the hundreds of millions of dollars it will focus on marketing polished diamonds this festive season will contribute to levelling out the market for rough.
Government, which rakes in billions of pula in dividends, royalties and taxes from Debswana, has said it is keeping a close eye on the downturn and its domestic impact.