Diamond miner De Beers said demand for rough diamonds in its first sales cycle of 2021 was strong, which was up by $99m ($72.5m) year-on-year, in part thanks to two upcoming occasions: Chinese New Year on 12 February and Valentine’s Day two days later.
Bruce Cleaver, De Beers Group CEO, said: "Following strong sales of diamond jewellery over the key holiday season in the US, we saw good demand for rough diamonds at the first cycle of the year.”
“Sales of rough diamonds are also being supported by expected demand ahead of Chinese New Year and Valentine's Day,” he added.
He said that while risks to recovery amid lockdowns and restrictions on the movement of both people and goods persist, “we have been encouraged by demand conditions."
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De Beers owner Anglo American (AAL.L) said the value of rough diamond sales for De Beers' first sales cycle of 2021 was $650m, up from $452m in the last cycle of 2020, and also up from $551m at this time last year.
De Beers runs 10 sales cycles per year where it sells rough diamonds. The cycles happen roughly every five weeks.
De Beers said that due to the pandemic it is continuing to implement a “flexible approach” to rough diamond sales and the sales figure quoted for cycle 1 represent the expected sales value for the period between 18 January to 2 February. It remains subject to adjustment based on final completed sales.
“Anglo American has just reported the sales data for De Beers’ first sales cycle of 2021 at $650m. This is 10% above the 20-year average for first sight sales and the highest value single sight since January 2018,” Barclays (BARC.L) said in a note.
De Beers finalised 2020 sales of $2.8bn, a fall of 30% year-on-year, in line with our modelling, the note said, adding that while demand has now recovered and exceeded pre-pandemic levels, the outlook is still likely to remain cautious in 2021 given ongoing lockdowns in key markets.
“We believe the miners have to negotiate a delicate balancing act between supply and demand with the market remaining vulnerable to oversupply from major producers which, despite significant destocking in Q4, are still holding material rough inventory,” Barclays said.
Last year in June, De Beers said sales of rough diamonds had slipped and blamed slumping demand in China due to the COVID-19 outbreak.
Last month, De Beers said rough diamond production decreased by 14%, driven by continued planned reductions in response to lower demand caused by the pandemic and operational challenges at the Orapa in Botswana, that led to lower than expected production.
De Beers said in December it extended its 10-year sales agreement with Botswana for another year to give both parties time to reach a new deal.
The contract was due to expire by the end of this month, but both De Beers and the government of Botswana said logistical challenges caused by the pandemic meant they needed more time to negotiate. A huge chunk of De Beers’ diamonds and sales comes from the African country.
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