De Beers said its October Sight showed that the diamond market had somewhat stabilised after going through rough times epitomized by low demand from struggling Sightholders.
Head of Downstream Communications for De Beers Group, Nigel Simson, told Rough & Polished that polished prices appeared to have largely plateaued although there are still areas where demand is sluggish.
Simson noted that the industry will see overall growth on last year, adding that while not all of the goods sold at the October Sight will translate into actual polished for the season, Sightholders need to continue to run their businesses and buy rough to keep a steady flow of goods through manufacturing.
He said the group’s projections for the medium to long term continue to indicate that demand will outstrip supply and that consumer demand from China, India as well as the U.S will continue to drive the diamond business forward.
Below are the excerpts.
What is your evaluation of the last Sight?
The Sight [went] well, which is a reflection of the market seeing some stability in polished prices in recent weeks as well as DTC's prices being seen to be in line with prevailing polished demand.
In the lead up to the Sight, the Hong Kong Jewellery and Gem Fair was largely in line with expectation, albeit that expectations were fairly low. While liquidity continues to be a problem and trading conditions are difficult, we are in the lead up to the major seasonal selling periods such as the Wedding Season in India, Diwali and the holiday season in the U.S and it is important that there is a period of stability and retailers have the confidence to come to the cutting centres to look for inventory.
Can you comment on the diamond prices recorded during the latest sight compared with previous sights?
DTC's rough prices were at a similar level to Sight 7, and reflected a fair return on a rough to polished conversion given the prevailing polished demand.
How does Philippe Mellier's statement about 'rough scarcity' correlate with such a high diamond sight?
So far 2012 has been characterised by continued volatility in the global economy, lower levels of polished demand and tight liquidity which has resulted in downward pressure on prices of polished and rough diamonds.
Diamonds are a finite resource, which need to be carefully and responsibly managed and as the CEO of De Beers Group, Philippe Mellier, has stated we must continue to match supply with the demand from the market, as well as factoring in underlying consumer demand to ensure the ongoing management of the diamonds in our mines and the mines of our Government partners.
Over the last few months, De Beers has reduced production against its forecasts in response to market demand. This means that in some cases we will not be able to fully meet the levels of supply to our Sightholders that we indicated in the early part of this year. However, our projections for the medium to long term continue to indicate that demand will outstrip supply and that consumer demand from China, India as well as the U.S will continue to drive the diamond business forward.
Why are we seeing high diamond sales despite the prevailing uncertainty on the market?
The first thing to mention is that we can only sell into demand, so the level of the Sight is a reflection of the demand we have from our customers. The level of purchases this Sight reflects a number of things; there is more stability in the market, polished prices appear to have largely plateaued although there are still areas where demand is sluggish and DTC's rough prices reflect the prevailing polished demand.
We believe that the industry will see overall growth on last year and while not all of the goods sold at this Sight will translate into actual polished for the season, Sightholders need to continue to run their businesses and buy rough to keep a steady flow of goods through manufacturing.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
