Mining

De Beers reports uptick in first sales cycle to $545m on “inventory restocking”

DE Beers’ diamond sales for the first sight or sales cycle of 2020 indicated the market may have stabilised, and could even be improving.

Sales totalled $545m which compares to $426m in the previous sales cycle – the last of 2019 – and the $500m achieved in the first cycle of 2019.

“Demand for rough diamonds increased during the first sight of 2020 following the end of year selling season and subsequent inventory restocking,” said Bruce Cleaver, CEO of De Beers in a statement to the Johannesburg Stock Exchange.

On Monday, Petra Diamonds noted a stabilisation in the diamond market towards the end of the fourth quarter of the calendar year.

“It is also encouraging that rough diamond pricing has modestly improved moving into our third quarter,” said Richard Duffy, CEO of Petra Diamonds. “The health of the market will depend on continued supply discipline from the majors as well as macro-economic conditions,” he said.

A number of factors have been blamed for a slump in diamond prices throughout 2019 including lack of demand in the midstream, referring to cutters and polishers. The midstream is also said to be struggling to attract credit.

Earlier this month, Bloomberg News reported that De Beers may be assessing how it sells diamonds to its select group of buyers owing to the recent difficult market conditions.

The company, owned 85% by Anglo American, was due to meet up to 80 accredited buyers in Botswana during the company’s first sale of the year. Customers were told to expect an update on possible changes during the gathering, said the newswire.

No final decisions have been made and details are only likely to emerge later in the year, Bloomberg’s sources said. De Beers’s current six-year contract with buyers expires at the end of 2020.

One of the ways in which De Beers could change its diamond selling process is to become more subjective on preferred customers. At the moment, it allocates more diamonds to buyers – known as sightholders – that have bought large amounts previously.

It’s designed to reward the strongest buyers, said Bloomberg News. But some in the industry suspect it’s resulted in irrational buying and dumping of stones, especially after De Beers allowed more flexibility in sales last year.

The post De Beers reports uptick in first sales cycle to $545m on “inventory restocking” appeared first on Miningmx.

Source: miningmx.com

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