Gaborone: De Beers said macro-economic conditions underpinning consumer demand for diamonds remain broadly stable in aggregate, with the U.S expected to continue to be the main driver of global growth in 2017.
Group chief executive Bruce Cleaver said in a statement in Anglo American’s annual report for 2016 that the extent of global growth will, however, be dependent upon a number of macro-economic factors, including the new administration in the US, the strength of the US dollar impacting consumer demand, economic performance in China, the effects of Indian demonetisation, and sentiment following the main US and Chinese New Year retail season.
“With midstream stocks having returned to more typical levels in 2016, rough diamond demand is expected to normalise in 2017, reflecting underlying consumer and retail demand,” he said. “While producers continue destocking, forecast diamond production (by De Beers) for 2017 is expected to be in the range of 31-33 million carats, subject to trading conditions.”
Cleaver said producers destocked during 2016, as sentiment in the midstream improved and rough and polished inventories normalised, supported by a series of initiatives put in place by De Beers, starting in the second half of 2015.
These, he said, included lowering rough prices, providing flexibility to Sightholders for their purchase arrangements and increased marketing activity to drive consumer demand.
De Beers’ rough diamond production decreased by 5 percent to 27.3 million carats in 2016 compared with 28.7 million carats a year earlier, reflecting the decision, taken in 2015, to reduce production in response to prevailing trading conditions.
However, its total revenue increased by 30 percent to $6.1 billion from $4.7 billion in 2015, driven by higher rough diamond sales, which increased by 37 percent to $5.6 billion.
This, said Cleaver, was attributable to a 50 percent increase in consolidated sales volumes to 30.0 million carats from 2015’s 19.9 million carats, partly offset by a 10 percent decrease in the average realised rough diamond price to $187/carat from $207/carat, a year earlier.
