Aug. 21 (Bloomberg) -- The Thanksgiving and Christmas holidays will be make or break for the diamond industry after a slow year, according to Gem Diamonds Ltd.
Holiday sales are “going to be extremely important,” Chief Executive Officer Clifford Elphick said today in a phone interview. “If it turns out to be reasonable I think all of us in the industry will give a collective sigh of relief. If it doesn’t go well it’s going to extend this period of twitchiness.”
Rough diamond prices fell 13 percent in the second quarter as Asian purchases slowed and the euro zone debt crisis eroded demand, according to data compiled by WWW International Diamond Consultants Ltd. Prices have risen by more than 20 percent in each of the past three years as producers struggled to keep pace with consumption.
Growth in global diamond demand may slow this year to about 3 percent to 5 percent from a record 10 percent in 2011, De Beers, the world’s biggest producer by value, said last week. Chinese demand growth may slow to 5 percent to 10 percent compared with as much as 30 percent last year. The U.S. is the biggest consumer of diamonds and accounted for about 37 percent of demand last year, according to BMO Capital Markets.
“Our two main markets are America and China and that is really where we look all the time for a lead as to where diamond prices are likely to go,” Elphick said. “Unfortunately as of today there are no clear trends. It’s too difficult to forecast.”
Gem, which operates the Letseng mine in Lesotho, earlier said that first-half profit fell 50 percent to $14.3 million. The shares dropped 2.2 percent to 185.9 pence as of 8:33 a.m. in London.
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