De Beers’s headquarters on Charterhouse Street in London. Picture: SIMON DAWSON/BLOOMBERG
De Beers’s headquarters on Charterhouse Street in London. Picture: SIMON DAWSON/BLOOMBERG

De Beers diamond sales have defied a weak global economy and competition from lab-grown gemstones to deliver a stronger than anticipated performance so far in 2018.

Analysts say this is driven by healthy demand from China’s retail jewellery market.

The world’s largest diamond producer reported its latest rough diamond sales on Tuesday, the fifth sales cycle for the year, at a provisional $575m. This is a 6% increase from the $541m realised in the same cycle in 2017.

Diamond consultant John Bristow said that while commodities had generally taken a big knock, the diamond business has escaped these blows and “is ticking along quite solidly and with a good outlook”.

Liberum Capital analyst Ben Davis said diamond sales differed from that of other commodities and never performed as expected.

“Most people thought this would be a tough year for the industry … but somehow the midstream still managed to buy,” Davis said, referring to the part of the industry that buys rough diamonds from mines and sells the gems on to jewellers.

The sales related to good demand from China, the world’s second-largest diamond market, Davis said.

One of China’s two big diamond jewellery retailers, Chow Tai Fook, reported that sales for the financial year ended in March rose.

Bristow agreed that the trend was supported by demand in China, but noted demand was healthy elsewhere too.

“The numbers are positive and the underlying fundamentals are positive,” he said.

Business Day has previously reported that analysts estimated lab-grown, or synthetic, diamonds could account for as much as 8% of the polished diamond market by weight, but less by value.

De Beers has announced it would set up synthetic diamond production. Although synthetic gems mainly compete at the bottom end of the market with smaller diamonds, De Beers CEO Bruce Cleaver said it continued to see good demand for its rough diamonds across the product range.