De Beers’ rough-diamond sales slowed in January as a disappointing holiday season piled further pressure on the midstream.
Proceeds fell to $505 million at the first sales cycle of the year, 25% lower than the $672 million it sold a year ago, the company reported Tuesday.
January is typically one of the biggest sales periods of the year for rough, as retailers and dealers restock after the holidays. However, sluggish polished demand resulted in caution among De Beers’ buyers, a sight broker noted. Many of them rejected more goods than normal, including larger stones they don’t usually refuse, he added.
“Sentiment hasn’t got much better over the holidays, so people are really struggling with polished sales being much slower than expected in January,” the broker told Rapaport News Monday. “It led to a lot of resistance at the sight. People looked at the goods, [but] margins are under pressure, and, therefore, people were not particularly pleased with [the diamonds] they saw.”
The miner kept prices stable, but dealers saw a decline in the premiums they could achieve on the secondary market, the broker added. A number of sight boxes are even reselling for less than the price at which traders bought them from De Beers.
Many sightholders wanted to leave products on the table, but didn’t because they feared losing future De Beers supply, Dudu Harari of brokerage firm Bluedax wrote in a report on the sight.
Meanwhile, there’s currently little hope of any long-term improvement in midstream profit margins, a sightholder explained.
“Polished prices are stable, even if the market improves, so there’s no room for rough prices to go up on the secondary market,” he said. “Even if [profitability] increases, it will only be for a few months, because there’s a lot of competition in the market.”