A production cut effected by De Beers, the world’s leading diamond producer, would help improve market dynamics for diamond this year, according to Varda Shine, managing director of Diamond Trading Company (DTC), the distribution arm of De Beers.
There were already signs of improvement in demand compared to the fourth quarter of last year, she told reporters here today. Against the backdrop of the global slowdown last year, De Beers has decided to cut its production by 40-50 per cent during this year.
The company has also decided to cut costs by 47 per cent. The cut also includes closure of some of their unviable mines.
Some slump-hit leading diamond producers have either shut some of their mines for maintenance or reduced capacity utilisation since the beginning of the recession. And some others have declared mining holidays.
According to Shine, diamond demand would see a fall between 5-10 per cent this year, but the fall in supply would be much larger, which will lead to an improved scenario for the industry.
On the Indian market, she said the country’s diamond processors have seen “some improvement” this year and are trying to “come back on track”. Three “sights” of DTC have seen steady improvement in sales in the current year and the trend is expected to continue, she said. DTC, the world’s largest supplier of rough diamonds, has a global market share of nearly 40 per cent.
However, a leading diamond processor here said that BHP Billiton, a rival of De Beers, has fetched high prices for rough diamonds put in an auction, indicating an improvement in demand.
BHP Billiton sells diamond through auctions, while De Beers trades rough diamonds through DTC and its sightholders.
US consumes 50 per cent of the polished diamond and Japan is second with 16 per cent of sales. According to DTC, India is the third-largest market for polished diamond.
To improve sales, DTC has planned a marketing campaign in the fourth quarter of this year in the US, which would benefit Indian traders also. “We have earmarked a big budget for this campaign and this will help Indian producers to sell more polished diamonds and diamond-studded jewellery in the biggest market,” Shine said.
She said that “last year was an aberration” as the processors were buying rough diamonds “at any price and at some stage, rough prices have gone up much faster than polished diamond”.
“Now, rough prices have aligned to more realistic levels. DTC has also revised prices of rough diamonds downwards,” she said. Shine, however, refused to divulge price details.
