Photographer: Chris Ratcliffe/Bloomberg

De Beers’s $520 Million Diamond Sale Defies Summer Slowdown

  • ‘We don’t see many risks here,’ says Kirill Chuyko at BCS
  • De Beers sold 29 percent more diamonds in the first half

De Beers’s $520 million of rough-diamond sales at its most recent auction is raising hopes that the industry can avoid a slowdown in the second half of the year.

While this was the smallest sale by the world’s biggest supplier so far this year, continued demand during a typically slow period is being taken as a good sign by analysts including Edward Sterck at BMO Capital Markets.

“This looks like an encouraging result given the seasonally quiet time of year in the diamond market,” London-based Sterck said in a research note Tuesday. “This is a positive data point.”

The diamond industry is seasonal, with the holiday period from Thanksgiving in November through the Lunar New Year in Asia in January or early February the busiest period for jewelry sales. Diminished inventories that follow during the first quarter mean cutters and polishers rush to refill stocks of rough stones. It’s been six years since prices advanced in the July-to-December period.

The industry is also facing headwinds from an industry credit crunch as key financiers withdraw and as demand weakens because of a slowdown in China and India, the second- and third-biggest consumers.

“We don’t see many risks here as volumes remain high,” said Moscow-based Kirill Chuyko, head of equity research at BCS Global Markets. “Summer is one of the weakest periods for diamond consumption.”

De Beers, a unit of Anglo American Plc, sold 17.2 million carats in the first half, a 29 percent increase on a year earlier, as it sold down inventories accumulated last year after prices slid. The company said last week that inventory levels across the industry were returning to more normal levels and that it wasn’t oversupplying the market.