Picture: REUTERS
Picture: REUTERS

De Beers’s fourth sale of the year is the lowest for the May period since 2016 and the company blames macroeconomic uncertainty and a seasonal slowdown in its largest market, India.

De Beers’s sales of $415m in May were the lowest for the month since the company first started releasing its sales data in 2016.

De Beers, which is 85% owned by Anglo American, has 10 sales events called sights every year when a handpicked group of about 80 buyers collect their diamonds from the Botswana capital, Gaborone.

In the latest data, De Beers noted it had realised $415m from its sights and auctions of rough diamonds, which was well below the previous low of $522m realised in the May sales of 2017 and nowhere close to the $636m high achieved in 2016.

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“Cycle four saw lower rough diamond sales against a backdrop of macroeconomic uncertainty, and as we enter a seasonally slower period for the industry with Indian factories closing temporarily for the traditional holiday period,” said CEO Bruce Cleaver.

India is the largest source of rough diamond demand, particularly for smaller diamonds, which are cut and polished in the country.

The global diamond market has experienced slowing demand for smaller diamonds, which make up the bulk of diamond mines’ production.

“Liquidity is tight, as Indian credit lines declined after the March 31 fiscal year end. Manufacturers reduced rough purchases in the first quarter, hoping to ease liquidity concerns by depleting polished stock,” diamond market specialist Rapaport said earlier in May.

“Combined rough sales by De Beers and Alrosa dropped 19% by volume and an estimated 30% by value in the first quarter,” it said.

Year-to-date sales by De Beers now total $1.99bn compared with more than $2.3bn in the same period in the previous two years and $2.46bn in 2016.

De Beers’s first-quarter production fell 8% to 7.9-million carats, a decline the company said was largely a result of the switch to underground mining at the $2bn Venetia operation in SA.

It noted that in the first quarter of the year it sold 7.5-million carats in two sales compared with 8.8-million carats in two sales events in the same period a year earlier “as overall demand for low-value rough diamonds remained subdued in the quarter”.

De Beers has kept its full-year production guidance steady at between 31-million and 33-million carats for 2019.

Russia’s Alrosa, the largest source of rough diamonds by carats, reported earlier in May that it had notched up rough diamond sales between January and end-April of $1.3bn, down from $1.98bn the year before.

It noted that buyers in India were struggling to find affordable financing.

seccombea@bdfm.co.za