July 26 (Bloomberg) -- De Beers, the world’s largest diamond producer, expects the market to grow faster in 2013 than last year as stronger U.S. consumer demand counters a faltering market in India caused by the rupee’s slump to a record low.
“The world market grew by more than 2 percent last year, we are forecasting growth for this year slightly higher,” Chief Executive Officer Philippe Mellier said on a call with reporters today. “We are cautiously optimistic. Clearly, the U.S. market is doing well, the Chinese market is not bad. We are certainly more worried about the Indian market.”
India lags behind only the U.S. and China, accounting for about 10 percent of global demand in 2011. That should rise to 13 percent by 2016 as the worldwide market for polished diamonds swells to $31 billion from $23 billion, De Beers owner Anglo American Plc forecast last year. The rupee retreated to a low of 61.2125 a dollar on July 8.
Mellier said he was concerned that the Indian market may contract this year after the company forecast in November that demand in the Asian country will expand at a “minimum” of 5 percent in 2013.
“In India, which is a little bit of a problematic market today, lets hope that the market will not drop in dollar terms because of the impact of the exchange rate,” Mellier said.
The U.S. diamond market is expected to grow more than last year, while consumption in China, the second-biggest market, will be similar to the previous 12 months, he said.
Consumer sentiment measured by the Thomson Reuters/University of Michigan final index jumped in the U.S. in May this year to 84.5, the highest level since 2007.
“De Beers expects moderate growth in diamond jewelry demand in the remaining six months of 2013, supported by improving sentiment in the U.S. market,” it said in a statement today. “Conditions in India and Japan remain more uncertain due, in part, to the continuing volatility of their currencies.”
The Japanese yen has weakened 10 percent this year, the worst performance among the 10 developed-market currencies tracked by the Bloomberg Correlation Weighted Indexes. Japan is the fourth-biggest diamond market.
“Despite the fragility of the global economic recovery, macro-economic conditions are generally supportive of global growth in the polished diamond market in 2013 at levels slightly above 2012,” De Beers said.
First-half sales were unchanged from a year earlier at $3.3 billion, De Beers said. Production rose 7.6 percent to 14.3 million carats and full-year output will be “broadly in line” with the 27.9 million carats in 2012, it said.
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