De Beers is having the worst start to a year since at least 2016, in the latest sign of difficulties plaguing the global diamond industry.
De Beers sold just $990m of diamonds in its January and February sales, known as sights. That’s the lowest since the Anglo American unit started publishing the data in 2016. Sales at the start of the year are usually the biggest, as diamond traders and manufacturers restock after the holiday season.
Diamond miners are struggling across the board, especially those producing cheaper and smaller gems where there is too much supply. In December, some of Rio Tinto Group’s customers refused to buy cheaper diamonds, while De Beers has been forced to cut prices and offer concessions to buyers.
Diamonds range from giant, flawless stones that sell for millions to fragments worth just a few dollars. There’s currently too much supply of the cheaper stones, resulting in tiny profits for the companies that trade, cut and polish them. De Beers said Tuesday that the bottom end of the market remains subdued.
There are low to no premiums in the secondary market, where De Beers’s customers sell to other traders and manufacturers, which means that buyers are struggling to make a profit on their diamonds, according to Guy Harari, co-founder of rough-diamond trading platform Bluedax. There’s also very little demand for smaller goods, he said.
De Beers sells gems at 10 sales a year in Botswana to a select group of customers. The buyers are expected to specify the number and type of diamonds they want, and then carry out the purchases at a price set by De Beers.