De Beers Said to Cut Diamond Prices in First Sale of 2016by
Company offers about $450 million of gems for sale, people say
Diamond prices fell 18 percent last year as China sales slowed
De Beers cut diamond prices further in its first sale of the year as the biggest producer struggles to counter slowing demand, according to three people familiar with the process.
The unit of Anglo American Plc reduced prices as much as 7 percent, said the people, who asked not to be identified as the information is private. De Beers plans to offer about $450 million of diamonds for sale, one said. A company spokesman declined to comment.
Slower diamond jewelry sales in China, the top buyer after the U.S., and a credit crunch in the industry has sapped demand. That’s left cutters and traders with excess stockpiles, and forced the biggest producers to cut output and prices. Diamond prices sank 18 percent last year, according to data from U.K.-based WWW International Diamond Consultants.
De Beers cut its output target three times in 2015 to try to support prices, from an initial 34 million carats to 29 million. This year, it plans to mine 26 million to 28 million carats.
“Rough and polished prices may need to go a good deal lower before they may be able to recover because with such an inventory overhang rough buying will likely be muted,” ABN Amro Group NV said in a research report on Tuesday. Rough prices may fall 5 percent this year, stabilizing in the second quarter as polished gems rebound and shortages for certain types of gems start to appear, Panmure Gordon & Co. said last week.
De Beers, 85 percent owned by Anglo American, is the world’s biggest diamond producer with mines across Southern African and Canada. The company sells diamonds at 10 sales a year at its offices in Botswana to customers known as sightholders.