A negative 2024 for the diamond market. There are several reasons: here are them.
The year that is about to end has been very negative for the sale of rough diamonds. The decline in demand that began with the pandemic period is still continuing and this year is estimated at -20% after having fallen by 30% in 2023.
The De Beers Group, one of the most important in the world in the sale of rough diamonds, has accumulated the largest reserve of diamonds in the world since the financial crisis of 2008. This was stated by the Financial Times which spoke of an inventory of 2 billion dollars. The prolonged decline in demand has forced the company to take action to limit the supply of precious stones.
Production in the mines has decreased by 20% compared to last year’s levels and the prices of the last auction have been reduced. The auctions are used to sell rough diamonds, that is, those that are not worked and cut and are attended by around 50 certified buyers who are then the most powerful traders in the world.
The diamond crisis is also evident in the turnover of the De Beers Group, which went from 2.8 billion in the first half of 2023 to 2.2 in the first half of this year.
It is not the only company that is feeling the effects of the crisis in the sector. The Russian Alrosa is also in a moment of difficulty amplified by the blocks imposed by the G7 after the outbreak of the war in Ukraine.
Why diamonds are in crisis
The crisis in the diamond market is primarily due to the drop in demand from China, the intensification of competition from lab-created stones and the effects of the lockdown.
China is one of the nations with the highest demand for diamonds in the world but since the lockdown there has been a slowdown, above all due to the competition from lab-created diamonds that simulate natural stones and cost one twentieth less than real ones. This is why the demand for artificial stones is growing more and more.
The outlook for 2025 is for a timid recovery, with global sales set to rise by around 6% next year to $84 billion.
The difficulties in the diamond market come at a crucial time for De Beers, which is set to be spun off into an independent company by its owner Anglo American. However, Anglo American CEO Duncan Wanblad has stressed that the general weakness of the sector could make a possible sale difficult.
To counter the decline in sales, De Beers has launched a new marketing campaign focused on natural diamonds, inspired by the famous advertisements that made it iconic in the second half of the 20th century. Bruce Cleaver, who has been CEO of the group since February 2023, has announced plans to increase investment in advertising and retail sales. The plan includes expanding the global network of stores, which will increase from the current 40 to 100 points of sale.
Original article published on Money.it Italy 2024-12-28 12:03:34. Original title: Perché i diamanti sono in crisi
