Rough diamond sales have stalled according to new reports. Anglo-American, the parent company of De Beers, has said that the volume of sales fell a staggering 26 percent year to year with only 14 million carats of rough diamonds in the first half of 2015. The blame for the significant decline in sales is because of low levels of restocking by diamond manufacturers and dealers who complained about the steep rise in rough and polished prices. Furthermore, De Beers rough diamond sales slumped as they agreed to a 25% refusal of goods in the first quarter of the fiscal year. This was done to encourage purchases.
Rough Diamonds Sales
Rough diamond sales market demand is soft. De Beers explains that it will refocus its efforts on reducing unit costs and operational efficiency. Capital flexibility at the Jwaneng and Venetia plants to reduce production. Secured a new 10 year sales agreement with the Namibia to secure a long term supply. Increasing the visibility of the Forevermark Brand, there was a 13 percent increase in participating stores worldwide since 2014. Forecasting that the diamond sales in the 2015 year will be stable. Demand growth over mid to long term set to outpace production growth. Projecting middle-class growth, which leads to diamond and jewelry purchases. The company's $3 billion upstream investment projects are in order, and its new exploration vehicle for Debmarine Namibia expects to debut 2017.
Rough Diamond Sales Decline
While De Beers rough diamond sales have experienced a decline, polished prices have accompanied on a downward spiral as well. Diamond cutters are under pressure. And note that they were unable to buy rough from the major suppliers and profit from the resulting polished. Cutter's refused to purchase "unprofitable" rough diamond materials at the Alrosa and De Beers alliance sale. Some 65 percent of goods were left untouched with the sale closing at a very low total of approximately $200 million. This is the lowest level of sales since the 2008-2009 economic downturn according to Rapaport records.
Rough diamond manufacturers have said that those declines were not far-reaching enough. As contracted rough supply remains well above the prices achieved at rough auctions and tenders and also on the secondary market, where trading was slow. Diamond dealers have drastically reduced their purchases from diamond cutters which have affected the overall market flow. Diamond dealers also expect that jewelry manufacturers will follow suit and not buy new inventory for the upcoming holidays. As of July, there was little rough diamond cutting and manufacturing coming into the market with plenty of polished available.
Diamond Mining
Rough diamond sales and the diamond mining business are interconnected. Furthermore, with diamond mining companies profits declining, lower level of rough imports to the trading and manufacturing centers. Furthermore, Belgium's rough diamond sales imports fell 19 percent on the year during the first half of 2015. Additionally, at the same time exports dropped 21 percent. Likewise in India, rough imports dropped a staggering 18%, and exports fell to almost 12 percent. The Antwerp World Diamond Centre explained that rough diamond purchases declined in all trading centers, including Antwerp, Ramat Gan, Mumbai and Dubai. Moreover, one AWDC official noted, "the price of rough diamonds remains high worldwide, despite the slight price decrease implemented by the major mining companies, while prices for polished diamonds were very low and global demand for polished diamonds also declined.
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Rough Diamond Sales