De Beers diamond sales slump in 2019

diamond inspection

De Beers ended 2019 on a depressed note with its 10th – and final – diamond sales “sight” for the year realising $425m which brings total sales for the year to $4bn which is 26% down on the $5.4bn worth of rough diamonds that De Beers sold in 2018.

According to JP Morgan Cazenove analyst Dominic O’Kane the situation could have been even worse for De Beers because JP Morgan had forecast total rough diamond sales for 2019 of just $3.5bn.

A terse comment from De Beers CEO Bruce Cleaver said that, “following continued polished diamond price stability in the lead up to the final sales cycle of the year we saw further signs of steady demand for rough diamonds during Sight 10”.

O’Kane described this assessment as “slightly more encouraging than previous Sights.” He added that JP Morgan’s analysis suggests “the bottom is near.”

De Beers markets its rough diamond production at 10 “sights” held throughout the year at which diamond buyers are offered “boxes” containing a selection of diamonds at stated prices which they can reject but traditionally are under considerable pressure to accept.

According to a Bloomberg News report in August this year’s slump in the global diamond market has forced De Beers to allow its buyers “unprecedented flexibility” in being able to reject the diamonds offered to them as well as in negotiating prices.

Bloomberg said De Beers cut prices across the board by about 5% in November. Rough diamond purchases by the diamond cutting and polishing sector have been hit by restrictions in the availability of credit.

On December 10, Bloomberg also reported that Anglo American – which owns 85% of De Beers – announced at an investor presentation that it intended to cut diamond production by De Beers by a million carats in each of its 2020 and 2021 financial years.