Mined diamond market slowdown

Diamond Market
[Image Courtesy: Happenings in Dubai Blogpost, UAE Happenings, GC]

In 2019 till now more than 7,000 retail stores have closed and by the end of the year the final tally may extend beyond 12,000 stores – double the 2018’s number. A clear indication that a retail slump is brewing in US, and which is affecting various sectors including jewelry and diamond market. Fallout of this situation are diamond mining companies who are facing weakened diamond demand, forcing them to cut diamond production.

Diamond mining major De Beers’ H1 results this year showed a 21 percent decline in rough diamond sales and 13 percent decline in volume terms. De Beers’ profit margins were also affected – In the same period, its EBITDA declined by 27 percent. This led the company to cut its diamond production by 11 percent YoY in the same period. The diamond miner has also reduced its production guidance from 33 million carats to 31 million carats for the year.

Similar is the case for world’s largest diamond miner Russia-based Alrosa, where diamond sales declined by around 22 percent QoQ in terms of carats volume and by 19 percent in terms of value, in Q2 this year. South African diamond miner Petra Diamonds‘ annual revenue ending June 30, 2019 also fell 6% well below analyst’s expectations. The company also expected its diamond output for 2020 to be slightly below last year’s production and also expecting a cut in its capital expenditure target for the year.

While the diamond recoveries at Firestone diamonds were up, its CEO Paul Bosma warned that “However, the diamond market is not great… From a market and pricing perspective, it was a tough financial year, particularly for the smaller, lower value goods and these conditions are expected to persist for the rest of 2019”

Diamond processing sector is also hit. According to India’s GJEPC (Gems and Jewellery Export Promotion Council), import of rough diamonds declined by 26 percent in April – June 2019 period and dropped by 37 percent in June alone. Whereas, export of cut and polished diamonds dropped by almost 20 percent in June 2019.

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