A Streak of Declines According to the latest data released by natural diamond producer and supplier De Beers Group on August 30, the company sold $370 million worth of natural diamonds during its 7th sales cycle (from August 14 to August 29) of 2023, marking a 42% decline year-over-year.
This downturn represents the fourth consecutive month of declining rough diamond sales for De Beers in 2023. After a steady growth in sales during the first quarter, sales dropped to $479 million in May (4th sales cycle), $456 million in June (5th sales cycle), and $411 million in July (6th sales cycle). By August 2023, De Beers' natural rough diamond sales had decreased by 10% month-over-month.
Furthermore, industry watchdog "Diamond Watch" noted in its analysis that, based on their records, this is the first time in nearly three years that De Beers has seen a year-over-year decline of over 40% in a single sales cycle.
Commenting on the August sales performance, De Beers Group's President, Al Cook, suggested that the current economic environment has led to a weakening demand for diamond jewelry in major consumer markets. Additionally, traditional midstream trading levels are typically lower during the summer, causing buyers to maintain a cautious purchasing attitude during this year's seventh sales cycle.
A decline in demand for diamonds in major retail markets like the U.S. and China has impacted the confidence of midstream buyers in the industry. In response, De Beers Group has recently introduced several measures to bolster market confidence.
In mid-August, diamond industry media outlet Rapaport cited sources saying that De Beers had further relaxed its purchasing policy for buyers, allowing them to defer up to half of their rough purchasing plans to 2024.
The report also mentioned an anonymous natural diamond miner who informed clients that they could opt out of purchasing rough diamonds over 2 carats during the remaining purchasing sessions in September, October, and December of 2023. This claim remains unconfirmed.
If true, this move is seen as De Beers Group's strategy to address the global decline in diamond demand and the increasing inventory pressures on midstream natural rough diamond dealers. "Diamond Watch" believes that this essentially means De Beers is "shifting the inventory risk onto itself." It also represents a top-down macro adjustment by De Beers Group in response to market dynamics.
Another confidence-boosting measure is the recent agreement De Beers Group signed with the government of Botswana in the southern African region. On July 1, De Beers Group inked a new 25-year diamond mining agreement and a 10-year rough diamond sales agreement with the Botswana government.
Following the agreement, Botswana's state-owned diamond company, Okavango Diamond Company, will explore partnerships with the Dubai Multi Commodities Centre to sell natural rough diamonds, in addition to its regular auction model and collaboration with HB Antwerp.
