De Beers $35m May sales highlights extent of pain in the world’s diamond sector

DE Beers sold $35m worth of rough diamonds in a sales cycle held in May, according to a report by Bloomberg News which cited an industry advisory firm as saying inventories among the top five diamond producers topped $3.5bn.

De Beers, which is 85% controlled by Anglo American, was forced to cancel a sale of diamonds from its Botswana base in March following the onset of the COVID-19 pandemic. The May sale compares to sales of $416m at the same time last year.

The next big test for the industry comes later this month, with De Beers’s next sale, said Bloomberg News. The company is going out of its way to attract customers, including by allowing diamond viewings outside of Botswana, it said. Buyers will still be allowed to refuse goods they’ve contracted to purchase.

Commenting on the diamond inventory build among the largest diamond producers, Anish Aggarwal, a partner at Gemdax, told Bloomberg News that: “They’ve tried to restrict rough-diamond supply to protect the market and protect value. The question will be, how does this de-stocking occur? Can miners de-stock and keep protecting the market?”

Aggarwal estimated the diamond inventory could reach $4.5bn by year-end which Bloomberg News said was a third of annual rough diamond production.

Diamond miners face “a double whammy of weak prices and a sharp decline in sales volumes on a scale reminiscent of the 2008-09 crisis,” Societe Generale analyst Sergey Donskoy was quoted by Bloomberg to have said.

“At this stage it’s hard to speculate on what the recovery curve will look like,” said Aggarwal. “What we’re not expecting is an immediate jump back in consumer demand.”