Diamond producers are limiting supply to rebalance the market.
De Beers combined its August and October sights into one September sale, while Petra Diamonds Diamonds announced a similar restructuring of its tender calendar during the same three months.
These moves stem from manufacturers holding high inventories of polished diamonds due to a slump in demand this year. They’re showing restraint in their rough buying as they don’t want to add to those stockpiles.
It seems to be working given reports of strong interest at the rough tenders that took place in Dubai last week.
Yet mining companies are also cutting back on their production plans, suggesting caution for the longer term. This, after global rough production fell to historic lows in 2023, according to Kimberley Process (KP) data.
It seems the miners are content to let production settle at a new, lower benchmark, which the market will likely set in 2024. The slump is primarily a response to the drop in demand.
It brings a sense of urgency to the various marketing campaigns that are planned for later in the year by De Beers, Signet Jewelers, Chow Tai Fook, and the Natural Diamond Council (NDC), and, of course, the luxury jewelry brands.
I explore these developments in my latest piece for the August issue of the Rapaport Research Report.
For now, there are enough diamonds on the market to satisfy demand. That has led producers to take a cautious approach to rough sales, but arguably more concerning is that their outlook is also forcing them to scale back their mining operations.
Read the full analysis, now available online here.
(Image credit: Shutterstock via Rapaport)
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