Diamond Production Down, Sales Volume Up

(paulzimnisky.com) - The global economy performed better than most expected in the first-half of 2016, as the world's largest diamond jewelry market, the U.S., held back on further rate hikes, and policy in China, the world's fastest growing diamond jewelry market, promoted credit creation. In the U.S. and China in particular, service sector growth trends have outpaced manufacturing, which typically suits consumer demand for luxury discretionary commodities like diamonds, more so than industrial/construction commodities, like base metals and energy. This trend was congruent with De Beer’s parent Anglo American’s most recent operational update released on July 28th which showed that in 1H 2016 diamonds represented 42.3% of Anglo’s EBIT (earnings before interest and tax) versus 30.6% over the same period last year. Russia-based Alrosa’s (RTS: ALRS) production decreased 6.0% in 1H 2016 over 1H 2015, but the company’s sales volume increased 20.6% in the period, consistent with the directional trends in De Beers’ figures. Alrosa’s average price per carat sold in the period decreased 2.3% to $115/ct.