A STOCKPILE of uncut diamonds worth billions of dollars built up during a downturn in the sector has been removed in a matter of months as consumers flood back to the market, said Bloomberg News citing a report by Liberum Capital.
“Alrosa and De Beers have managed to clear the excess inventories built over the course of 2020 and without hurting polished-diamond pricing that continues to advance,” Bloomberg quoted Liberum Capital analyst Ben Davis to have said. “This bodes very well for the remainder of the year to clear that much stock in such a short space of time.”
Russian miner Alrosa’s inventories tumbled about 60% in six months to 12.8 million carats by the end of March, the lowest in almost three years, said Bloomberg News. It added that whilst it did not have specific data on De Beers, the Anglo American-owned company had indicated to its customers that inventories had been significantly reduced.
The improvement in demand has encouraged diamond miners to raise rough diamond prices. Since the end of last year, De Beers has been hiking prices back to pre-coronavirus levels, said Bloomberg News. It sold more than $1.6bn in rough gems in its first three sales of 2021, the most since 2018.
While the speed of the stockpile drawdown caught many by surprise, the big question is whether the industry will be disciplined enough not to sell too much too soon, said Bloomberg News. “The industry has to use supply and pricing in tandem,” said Anish Aggarwal, a partner at adviser Gemdax. “That’s been the big takeaway from this crisis.”