De Beers Diamond Sales Plunge Again
(Bloomberg) -- De Beers's diamond sales plunged again at the company's latest offering, underlining a slump in demand from the miner's customers who are struggling to make a profit at current prices.
Sales by the Anglo American Plc unit plunged 33% from a year ago to just $390 million and were down 6% from an offering last month. While this is often a quieter time of the year following the key holiday period, total sales for 2019 are still much weaker than in previous years.
Diamond miners are facing a mini crisis as demand remains weak, while supply, especially for smaller and cheaper stones, is abundant. That's put pressure on polished prices, crimping the margins for De Beers's customers who cut, polish and trade the stones.
De Beers has held prices relatively stable so far this year. That has led to customers declining to take up all the stones they'd previously agreed to purchase, as they struggle to make a profit at current levels. Buyers have also been hit by a shortage of finance and stagnant end demand, and a weaker rupee has made gems more expensive for Indian manufacturers, who cut or polish about 90% of the world's stones.
"While overall retail sentiment for diamond jewelry in the U.S. remains solid, a more challenging environment in China and higher-than-normal polished diamond inventories in the midstream resulted in a cautious approach from rough-diamond buyers during the fifth cycle of 2019," said De Beers Chief Executive Officer Bruce Cleaver.
De Beers sells gems at 10 sales a year in Botswana to a select group of customers. The buyers are expected to specify the number and type of diamonds they want, and then carry out the purchases at a price set by De Beers.
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