Diamond Gems Weekly - July 22.
I’ve been thinking a lot about production levels. What volumes are required to fulfill demand? Is that driven by retail or does the wholesale-dealer market have its own ecosystem that stimulates or suppresses the rough sector? How does retail inventory management play into the dynamic? As the pipeline becomes more efficient, does it require fewer diamonds?
These are discussion points more than questions with clear answers. What we know is that the market is more efficient than it used to be thanks to technology used in all segments, particularly in diamond manufacturing. Meanwhile, ecommerce has made inventory more easily accessible to jewelers. We also know that midstream inventory levels are on the rise.
It all makes for a tricky market for everyone, including the mining companies which need to plan their output based on their assessment of current and predicted future market conditions. Remember, production levels sunk to historic lows in 2023, as I noted two weeks ago.
And that’s where we begin our roundup of the 10 stories shaping the diamond and jewelry industry this week:
1. Production continues to decline. De Beers reported output fell 19% to 13.3M carats in 1H. The company said it is “assessing options to further reduce production,” given the “higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery maintained its production.”
2. De Beers has eased its sightholder buying rules at this week’s sight in response to the market downturn by limiting supply rather than lowering prices, Rapaport reported.
3. Among the mid-tier miners, Rio Tinto saw production at its Diavik mine down 28% to 1.9M carats in 1H. Petra Diamonds bucked the trend with production up 2% to 1.3M carats and sales rising 51% to $178M in fiscal 2H (Jan.-Jun.). Petra’s fiscal year results can be viewed here.
4. A panel discussion during the Initiatives in Art and Culture’s annual Gold + Diamond Conference in New York noted, The Current State of the Diamond market Is… Not Good.
5. In another session at the conference, Brad Brooks-Rubin, senior adviser for the State Department’s Office of the Sanctions Coordinator, stressed the US is still considering a traceability program as part of its sanctions on Russian diamonds. It is also likely that the US will follow the EU by delaying implementation of the proposed program to March 2025.
6. The luxury segment remains robust in most geographies but is being weighed by the slowdown in Asia. I assess Richemont’s China Woes in my latest Diamond Minute video.
7. Swatch Group noted a sharp drop in demand for luxury goods in China as group sales fell 14.3% in 1H. Sales outside of China were flat compared to 1H 2023 – a record period for the company.
8. India remains a bright spot. Titan Company is well positioned to gain from the country’s emergence as an important diamond jewelry market, as I explain in this video.
9. The AWDC appointed Karen Rentmeesters as its permanent CEO, after filling the role for an interim period after Ari Epstein stepped down in April.
10. The focus will remain on De Beers and the luxury segment as more earnings and sales releases are scheduled in the week ahead.
Image: Worker oversees production at the Cullinan underground mine (Petra Diamonds).
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