De Beers's diamond sales plunged again at the company's latest offering, underlining a slump in demand from the miner's customers who are struggling to make a profit at current prices.
Sales by the Anglo American unit plunged 33 per cent from a year ago to just $390 million, and were down 6 per cent from an offering last month.
Shares in the mining giant edged up despite the news, adding 0.2 per cent to close on 2183.5 pence in London, and are trading almost 25 per cent up so far this year.
The FTSE 100 firm said a "challenging" trading environment in China had resulted in a fall in sales. However, the company said overall retail sentiment for diamond jewellery, particularly in the US, had remained positive.
Its De Beers Group rough diamond arm reported provisional sales of $390 million for its fifth sales cycle of 2019. This represented a decline of 6.3 per cent from its sales of $416 million in the fourth sales cycle of the year. The company runs 10 five-day sales cycles throughout the year.
Diamond sales plunged 32 per cent year-on-year, dropping from $581 million of sales reported in the fifth cycle of 2018.
While this is often a quieter time of the year following the key holiday period, total sales for 2019 are still much weaker than in previous years.
Diamond miners are facing a mini crisis as demand remains weak, while supply, especially for smaller and cheaper stones, is abundant. That has put pressure on polished prices, crimping the margins for De Beers’s customers who cut, polish and trade the stones.
Profit
De Beers has held prices relatively stable so far this year. That has led to customers declining to take up all the stones they had previously agreed to purchase as they struggle to make a profit at current levels.
Buyers have also been hit by a shortage of finance and stagnant end demand, and a weaker rupee has made gems more expensive for Indian manufacturers, who cut or polish about 90 per cent of the world’s stones.
Bruce Cleaver, chief executive at De Beers Group, said: "While overall retail sentiment for diamond jewellery in the US remains solid, a more challenging environment in China and higher than normal polished diamond inventories in the midstream resulted in a cautious approach from rough diamond buyers during the fifth cycle of 2019." – PA/Bloomberg
