Debswana Diamond Company - the world's No.1 diamond producer by sales value - remains optimistic about recovery in the global diamond market, despite a "much more challenging 2015 (due) to inventory indigestion", which forced the miner to cut its 2015 production target to 20 million from 23 million carats due to slowing demand in India, China and the USA. Such optimism resonates with De Beers' stable outlook on the diamond market. De Beers is a 50 % partner with Botswana Government at Debswana. Late last week Anglo American - De Beers’ parent company – said in a statement that the value of rough diamond sales for their fifth sales cycle amounts to $560 million, compared with the $636 million value of the fourth cycle of 2016. “Sales in the fifth cycle of the year were somewhat lower than in the fourth cycle, in line with our expectations and typical seasonal demand patterns. Rough diamond demand and polished diamond prices remain stable, reflecting steady consumer demand but we maintain a cautious outlook,” said De Beers outgoing Chief Executive, Philippe Mellier.
Responding to questions on the current situation in the diamond market last Thursday, Matshidiso Kamona - Corporate Affairs Manager at Debswana – said so far in 2016, consumer demand for diamond jewellery has continued to be robust, led by the US consumer market. She, however, said the outlook for consumer demand for diamond jewellery for the rest of this year will be dependent on the prevailing macroeconomic conditions in the main consumer markets. Kamona said looking back at consumer demand for diamond jewellery in 2015, Debswana saw robust performance. She said US – the largest and most mature market for consumer sales of diamond jewellery – led global growth, hitting a new record high of $39bn, while global consumer demand for diamond jewellery reached a total of $79bn. "Chinese consumers also continued to increase their overall spend on diamond jewellery. However, the relative strength of the US dollar in 2015 had a negative impact on consumer demand in non-USD dollar denominated consumer markets," she said.
In terms of rough diamond demand, 2015 was a much more challenging year, she said. However, despite the challenges of ‘inventory indigestion’, De Beers responded decisively to the difficult trading conditions in the midstream in the second half of 2015 by adjusting production and prices accordingly, investing in additional marketing and introducing more flexibility for Sightholders. Kamona said these actions had a positive impact on supply chain dynamics and helped the industry to rebalance. "Additionally, positive holiday selling season in the United States in 2015, have helped rough diamond demand conditions normalise and since the beginning of 2016 rough diamond sales have recovered well. De Beers has, in fact, just completed its fifth rough diamond sales cycle of 2016 at a provisional value of $560m, in line with expectations and typical seasonal demand patterns," she said.