De Beers Sells $575M Amid Strong Demand

RAPAPORT... De Beers recorded its largest monthly sales since January asshortages and strong sentiment supported the rough-diamond market in June.The miner sold $575 million worth of rough at last week's sightand other sales events during June, including auctions, it reported Tuesday. Itmostly maintained prices, with some small increases in larger categories where demandis especially strong, sightholders and brokers told Rapaport News. "There was substantial demand for the [1-carat-plus] rangesince polished in the 0.30- to 5-carat GIA-certified range is wheremanufacturers are seeing the fastest return on their goods," Dudu Harari ofdiamond broker Bluedax said in a report on the sight. The rough market remained robust throughout the first sixmonths, in contrast to last year, when demand tailed off as the summerapproached, according to buyers. "Chinese demand usually dries up in May, then more in Juneand July, but because of shortages, the market is still good," a sightholdersaid. "Last year was difficult in terms of [manufacturers'] profit, but thefirst six months of this year have been good." Manufacturers are willing to buy rough and cut it becausemidstream polished inventories are relatively low, another sightholderexplained. At the moment, that oftenmeans paying more for the rough than they're used to spending, he noted. Inaddition, the major consumer markets are either strong or poised to improve,indicating a positive outlook for diamond dealers, he added. "The Far East is not strong now [compared with what it couldbe], and India also has room to improve," the sightholder said. "The US has beendoing well as an economy for a while. Come September and October, the marketcould be even stronger than now." This month saw De Beers' second-highest proceeds this year,behind January, when post-holiday restocking led to sales of $672 million. Junesales were 3.8% higher than May, when it sold $554 million of rough, and 6%higher than a year ago. De Beers' rough-diamond revenues are down 1.5% year on yearto $2.89 billion from the first five sales cycles, according to Rapaportcalculations. The miner sells its rough across 10 cycles during the year."Sentiment in the diamond industry's midstream is positivefollowing the JCK Las Vegas trade show at the start of the month, and wecontinued to see good demand for our rough diamonds across the product range,"said De Beers CEO Bruce Cleaver.Dealers' average premiums - the margins they can makewhen they trade rough on the secondary market - were between 3% and 6%following the De Beers sight, dealers estimated. Demand was also strong at Alrosa's June contract sale lastweek, with the Russian miner raising prices of higher-value rough diamonds,traders reported."The market in the secondquarter shows high performance, and we see good demand for rough diamonds," anAlrosa spokesperson told Rapaport News. "Seasonal decline, which istraditional for this period, was not as visible."The miner's prices increased in somecategories, and fell in others, the spokesperson added.