The world’s two biggest diamond miners are selling stones again after the industry virtually halted supplies in a desperate attempt to halt a collapse in prices.
This year’s rout, driven by swelling inventories, forced the sector to take radical steps to prop up the market. Russia’s Alrosa PJSC halted all sales for two months in September, followed by a voluntary ban on imports by buyers in India – the dominant cutting and trading centre. De Beers has allowed its customers to reject any gems they’ve contracted to buy.
There are now signs that the market is starting to recover. Alrosa began selling rough diamonds again at the end of November, selling more than $100 million, according to people familiar with the matter. De Beers, which held its last sale of the year in early December, sold a similar amount, said the people, who asked not to be identified because the details are private.
The industry has been whipsawed since the start of the pandemic. It had been one of the big winners as stranded shoppers turned to diamond jewellery and other luxury purchases. But demand quickly cooled off as economies reopened, leaving many in the trade with excess stock that they’d overpaid for.
The slowdown quickly turned into a slump as the US, by far the industry’s most important market, reeled under rising inflation. In addition, the key growth market of China was hit by a real estate crisis that dented consumer confidence. To make matters worse, lab-grown diamonds began to make big gains in some key markets.
This left the industry with little choice but to choke off supply. These efforts appear to be working so far, with some price gains for rough diamonds, although there are still concerns that fresh supplies from miners’ large stockpiles could test the recovery.
Alrosa’s most recent sale was to a handful of mostly Indian buyers, the people said. Many in the industry refused to deal in Russian gems after Moscow’s invasion of Ukraine, when Western retailers said they didn’t want to buy the stones. Before the war, Alrosa sold to about 50 customers a month.
And while De Beers has resumed sales, it’s still allowing buyers to reject goods they’re contracted to buy, the people said. The unit of Anglo American Plc has a long history of managing supply by stockpiling goods to prevent prices from falling.
De Beers and Alrosa declined to comment.
India’s diamond industry also announced earlier this month that it would lift a voluntary ban on imports, expecting demand to pick up and prices for polished goods to stabilise.
The miners’ sales have been small compared with what the dominant producers usually expect to sell at this time of year. The recovery has also been driven by buyers who are short of stones and need new supplies to keep factories open, rather than strong demand for polished gems, people said.
A more lasting recovery will depend on how robust jewellery sales are during the crucial holiday season, which runs from Thanksgiving to Chinese New Year.
