Rio Sees China Diamond Demand Growth on Wealth, Cultural Shift

  • Demand growth estimated at up to 8% per annum in 5-10 years
  • Condition is in place for price to rise again in 12-18 months

China’s demand for diamonds is set to rise at a pace faster than the global average as gains in household wealth drive a demographic and cultural shift in the most-populous nation, according to Rio Tinto Group.

As China moves toward a consumption-based economy, sales are likely to grow 8 percent a year in the next 5 to 10 years, exceeding the 3 percent to 5 percent per annum forecast for the world, Alan Davies, Rio’s diamonds and minerals chief executive officer, said in an interview in Beijing.

China accounts for about 13 percent of the $85 billion-a-year global diamond market with per capita spending still at one-tenth of that in the U.S., according to Rio’s estimates. Prices for rough diamonds have slumped about 15 percent this year as Chinese demand growth has shrunk amid an economic slowdown, stock market turmoil, and an anti-corruption campaign that’s stifled purchasing of luxury goods.

“There’ll be ups and downs in consumption, but over a normalized period conditions are in place for price to rise again” as some of the larger rivals will “burn off” the excess stockpiles on balance sheets over the next 12 to 18 months, Davies said on Friday.

De Beers, the world’s biggest diamond producer, is boosting expenditure on marketing in China to prop up growth and attract new consumers, targeting women between the ages of 18 and 29, and buyers in third- and fourth-tier cities. China’s diamond jewelry market grew six percent in 2014, amid a rapid expansion of stores across the nation. That has slowed to three or four percent this year, Stephen Lussier, De Beers’ executive vice president, said last month in Hong Kong.

— With assistance by Feiwen Rong

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