Industry News by Nemesis

Stronger Rough Demand Propels De Beers April Sales Cycle to $660M

April 13, 2016

De Beers reported sales of rough diamonds jumped to $660 million in its April cycle as stability in both polished prices and wholesale activity supported solid demand. 

Sales were 7 percent above the February second-cycle revenue, which was revised up to $617 million. The result compares with an estimated $536 million of sales recorded in the third sight a year ago and is also significantly stronger than the sights in the second half of 2015, according to Rapaport News records. 

The third-cycle revenue figure includes the sight held in Gaborone, Botswana, from April 4 to 8, as well as auction sales and supply to beneficiation and government partners. De Beers holds 10 sights in a year. 

“So far, 2016 has seen significantly stronger rough diamond demand than that experienced at the end of 2015 as the actions taken by the industry continue to have a positive effect,” said Philippe Mellier (pictured), De Beers chief executive officer. 

“However, we are now moving into a part of the year where rough diamond demand has historically been lower as a result of seasonality, so we continue to adopt a prudent mindset.”

Amid strong demand in the first quarter, De Beers increased prices by low single-digit percentages primarily by adjusting its assortments, meaning boxes of goods were priced higher than at the last sight, sources told Rapaport News. Some goods saw an actual increase in prices, sightholders said. The change was “mainly a rebalancing,” according to David Johnson, De Beers head of midstream communications.

Demand for De Beers goods on an in-plan basis – the rough sightholders had committed to through their intentions-to-offer (ITOs) – exceeded supply, with demand for ex-plan goods also strong. 

The miner is in the process of finalizing the new ITOs for 2016-17, which will be communicated to sightholders on April 22 ahead of the fourth sight of the year in May. 

Despite increasing prices this month, De Beers goods are still considered better value than those of ALROSA which has kept prices stable in the past six months, even when De Beersraised them in January, sources said.

“There’s no doubt De Beers is the best value in the market,” a sightholder told Rapaport News.

 

Source: Rapaport

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