But De Beers declares: “Situation with the smaller, lower value diamonds looks to be improving”
The sale of Meele diamonds – small less valuable natural occurring diamonds – has proved ‘challenging’ for De Beers Group of Companies for 2018.
One of the reasons for the difficulty in pushing Meele stock is the flooding of the market by an Australian Argyle miner in the last three months of 2017. The miner naturally produces high volume of Meele diamonds and recorded high production during the last quarter of 2017.
“This has also been in part due to a very challenging Rupee-Dollar exchange rate for Indian diamond businesses,” said De Beers on another factor that contributed to the decline in sales of Meele diamonds.
Indian diamond buyers, some of which are De Beers Sightholders, usually buy in Dollars but sell in Rupees, meaning that they are very sensitive to significant weakening of the Rupee against the Dollar. However, De Beers reassures that the supply situation is expected to continue to ease, and the Rupee has strengthened somewhat against the Dollar since the most challenging point earlier in the year.
The company would not be enticed to disclose how much it lost due to the challenges alluded to above price as policy does not allow the disclosure of information on price movements outside of information on average price index changes at half year financial reporting.
Responding to a query on whether the addition of three new mines in 2017 brought global rough production to its highest level since 2008 resulting in the excess supply, De Beers said the higher supply is also set against record consumer demand for diamond jewelry last year, coupled with conditions being supportive of further growth for 2018.
“This demand growth has been supported by De Beers Group’s growing marketing investment. Last year the investment in consumer marketing for diamonds was the most in a decade, and we will be investing even more again this year, around $170 million,” said De Beers.
De Beers said it is also responding to the challenges which have resulted from economic issues and third party supply by initiating a specific marketing campaign in India focused on consumer demand for products containing melee diamonds. It is also optimistic of the Meele diamond situation and believes it to be improving. The company cites encouraging signs for US consumer demand for diamond jewelry, which would further assist the situation.
Patriot Business’ interrogation of the topic was sparked by a recent Rapaport Research Report that announced that there was a sharp decline in prices of small, low-value diamonds that will exert further pressure on India’s manufacturing sector.
According to the report, prices in some categories have dropped by up to 20% in 2018 due to an over-supply and weaker demand.