De Beers Sales Drop in Slow Rough Market

RAPAPORT... De Beers' sales slumped to $295 million in September as the minercontinued to allow sightholders to refuse goods in the prevailing weakrough-diamond market. The company maintained firm prices and offered increasedflexibility to encourage lower purchases, thereby reducing the oversupply inthe polished sector, sightholders explained to Rapaport News. Itcontinued its policy of allowing clients to reject 50% of their allocations. It also expanded its buyback program by enabling customers to sell back to De Beersup to 30% of goods in the 2- to 10-carat rough categories, and 20% of thesmaller items that constitute the majority of its supply. "[De Beers] wants the market to recover before bringing moregoods to the market," an India-based sightholder noted. "They know if they tryto push more goods into the market it will take more time to recover." Proceeds from the eighth sales cycle of the year were higherthan the $287 million it recorded in August, but fell 39% below the $482million the company garnered a year ago, De Beers reported Thursday. Themidstream is still struggling with a surplus of goods amid weak polished sales,aggravated by social unrest in Hong Kong, which hampered a recovery in Far Eastdemand, an Antwerp-based sightholder explained. "[De Beers] had this scenario in mind, which started inJuly, that they would not change prices, and would restrict the volume thatgoes to the market," the sightholder observed. "People are picking out theitems which are relatively OK, but there's no big appetite for the goods." Thepipeline still contains too much polished, with sellers struggling to offloadinventory because competitors are significantly lowering prices, thesightholder added. The September sight is traditionally a smaller sale asdiamond manufacturing slows ahead of India's Diwali festival, when factoriesclose for around three weeks. Indian manufacturers are demonstrating somedemand for rough so they can resume operations after the festival, which thisyear begins on October 27. "As we approach what is traditionally a quieter time of year for the diamond industry during the Diwali holiday, we have again offered our customers flexibility during this sales cycle," De Beers CEO Bruce Cleaver said in a statement. Meanwhile, sightholders have one eye on the upcomingreassessment of their allocations for the 2020 sales session, known as anintention-to-offer (ITO) period, which De Beers determines based on theirpurchases during the current ITO, sources added. The company is shifting to acalendar-year ITO period from January, replacing the previous April-to-Marchsystem. As a result, the review of supply will take place before the end of 2019, ratherthan during the first quarter. De Beers' rough sales have fallen 27% year on year to $3.21billion in the first eight sights, according to Rapaport records. The nextsight will take place from November 4 to 8. Image: Rough-diamond sorting at De Beers' operations in Windhoek, Namibia. (Ben Perry/Armoury Films/De Beers)