De Beers expects reduced demand for gem jewellery

DE BEERS, the world’s top diamond producer, expects a reduced demand for its smaller and lower quality diamonds because of the troubled US economy.

The biggest demand for smaller and low quality stones is from the United States and the “mass marketed retail diamond jewellery sales have been impacted by economic issues in the most important market, the United States”, De Beers says in its interim results for the first six months of 2008, ending June 30. The US market accounts for around half of all diamond jewellery sales.The diamond giant predicts that demand for diamonds will remain subdued for the rest of the year.”While strong growth in China, India, Russia and the Middle East has helped to mitigate the impact of the US slowdown, the overall retail market is likely to be challenging,” De Beers says.Despite the slowdown in US demand, the marketing arm of De Beers, Diamond Trading Company (DTC), has recorded a 10 per cent increase in its sales compared to the first half of 2007 totalling US3,3 billion.This is because of higher demand from cutters, leading to price hikes in rough diamonds.According to a Reuters report, DTC hiked the prices of rough diamonds in April by 8,5 per cent and again increased them by a further five per cent this month.During the period under review DTC has supplied approximately US$637 million worth of diamonds to 11 clients in Namibia, 16 in Botswana and 17 in South Africa.These stones were supplied as part of De Beers’ beneficiation programme.Production in the first six months also fell by 4,2 per cent compared to the first half of 2007.Total carats recovered during the period under review amounted to 24 226 compared to 25 274 last year.De Beers is a 50 per cent shareholder in Namibian mining company Namdeb, with the remainder held by the Namibian Government.The US market accounts for around half of all diamond jewellery sales.The diamond giant predicts that demand for diamonds will remain subdued for the rest of the year.”While strong growth in China, India, Russia and the Middle East has helped to mitigate the impact of the US slowdown, the overall retail market is likely to be challenging,” De Beers says.Despite the slowdown in US demand, the marketing arm of De Beers, Diamond Trading Company (DTC), has recorded a 10 per cent increase in its sales compared to the first half of 2007 totalling US3,3 billion.This is because of higher demand from cutters, leading to price hikes in rough diamonds.According to a Reuters report, DTC hiked the prices of rough diamonds in April by 8,5 per cent and again increased them by a further five per cent this month.During the period under review DTC has supplied approximately US$637 million worth of diamonds to 11 clients in Namibia, 16 in Botswana and 17 in South Africa.These stones were supplied as part of De Beers’ beneficiation programme. Production in the first six months also fell by 4,2 per cent compared to the first half of 2007.Total carats recovered during the period under review amounted to 24 226 compared to 25 274 last year. De Beers is a 50 per cent shareholder in Namibian mining company Namdeb, with the remainder held by the Namibian Government.