November 13, 2023
De Beers plans to stockpile unsold diamonds after the world’s largest producer responded to falling prices by allowing its buyers to refuse to buy all the stones for which they have contract.
“We build up stocks of them because we are confident that over time the price of diamonds will increase and we will be able to sell that supply to the increasing demand that we believe will come,” CEO Al Cook said at a briefing in Gaborone. .
Diamond world takes radical steps to stop falling prices
The industry had been one of the big winners of the global pandemic, as homebound shoppers turned to diamond jewelry and other luxury purchases. But as economies opened up, demand cooled quickly, leaving many in the sector with excess stock, for which they had paid too much.
What seemed like a cooldown quickly turned into a diamond drop. The United States, by far the industry’s most important market, reeled under rising inflationary pressure, while China, a key growth market, was hit by a housing crisis that undermined consumer confidence. To make matters worse, the insurgent lab-grown diamond industry began to make significant inroads in a couple of key segments.
De Beers’ decision to allow customers to reject products was the latest in a series of increasingly desperate measures across the industry to stem this year’s slide in diamond prices. De Beers’ rival, Russian miner Alrosa PJSC, has already canceled all sales for two months, while the Indian market, the dominant cutting and marketing centre, had halted imports.
Cook said the company will meet its goal of producing up to 33 million carats of rough diamonds in 2023, despite what its chief executive called an “exceptionally difficult year” in which global forces had conspired to slow the trade. .
De Beers’ most recent diamond sale, held in October, was the smallest since the pandemic year of 2020. The Anglo American Plc unit will also allow customers to reject products at its last sale of the year.
De Beers has a long history of managing the supply of diamonds to the industry by storing goods to prevent prices from falling.