De Beers, the world’s leading diamond producer, has implemented significant price cuts in a bold move to revive gem sales following a notable market slowdown last year. The diamond industry, which nearly ground to a halt in the latter half of 2023, saw major miners drastically reduce supplies in a bid to prevent a collapse in prices. While this strategy did inject some life back into the market, the current demand level from trade buyers remains uncertain.
In a strategic effort to stimulate demand, De Beers slashed prices by about 10% across all categories at its first sale this year, a traditionally large event. Sources familiar with the matter, who requested anonymity, revealed that the reductions were even steeper for certain larger stones, with some prices falling by approximately 25%.
The diamond industry has experienced dramatic fluctuations since the pandemic’s onset. Initially, as consumers found themselves confined to their homes, there was a surge in diamond jewellery purchases and other luxury items. However, as economies reopened, demand dwindled, leaving many traders with overpriced excess stock.
The situation worsened with rising inflation in the vital US market, waning consumer confidence in China amidst a property crisis, and increasing competition from lab-grown diamonds. Consequently, the industry faced no option but to cut back on supply. Notably, Russia’s Alrosa PJSC ceased all sales for two months in September, a move echoed by Indian buyers—the main hub for diamond cutting and trading—who voluntarily halted imports.
According to a report by Mining Weekly, De Beers, a unit of Anglo American, despite market declines, initially maintained its prices and allowed its customers to refuse contracted gems in the last two sales of 2023. However, the company has now removed this option and gone ahead with price reductions.
This sale’s most significant price drop was in the “select makeables” category—diamonds between 2 and 4 carats, which are high-quality but not flawless and often used in bridal rings. Despite previous price cuts, De Beers further reduced these by another 25% this month. These specific diamonds have been particularly affected by the rising popularity of synthetic diamonds, which have also seen a drop in prices.
The first sale of the year is crucial as midstream buyers, who transform rough stones into polished jewels for jewellery, restock following the holiday season. This sale sets the tone for the industry’s year ahead.
The central question now is whether De Beers’ latest price cuts will generate the desired momentum. Prices began to recover towards the end of last year, driven by buyers needing new stock to keep their operations running amidst limited supplies. These cuts could potentially catalyze further recovery, especially if they attract buyers who were previously hesitant due to high prices.
This move by De Beers reflects a strategic pivot in response to a series of global challenges that have rocked the diamond industry. From pandemic-induced market shifts to the rise of lab-created diamonds, the industry has had to adapt rapidly. De Beers’ decision to slash prices is indicative of its commitment to maintaining market relevance and supporting the broader diamond trade ecosystem.
As the industry looks ahead, all eyes will be on the impact of these price reductions. Will they be enough to entice buyers back into the market? Or will the diamond industry need to explore further strategies to navigate the complex economic landscape? The answers to these questions will shape the future of this glittering industry.
