Analysts expect a drop in De Beers' rough diamond sales figures
David McKay
THE Central Selling Organisation (CSO), De Beers'
marketing arm, could report a reduction of more than
$1bn in the value of its rough diamond sales for the six
months to June, industry sources said yesterday.
The first four sights of this year were less than about
$300m each. Analysts expect an increase in the value
only at the fifth sight, in response to signs of possible
revival in demand downstream. The CSO holds 10
"sights" a year in which parcels of different quality stones
are distributed to downstream users such as diamond
cutters and polishers.
Estimated interim period sales would be about $1,6bn,
well off last year's record first half of $2,8bn.
Roger Chaplin, a diamond analyst for London
stockbrokers T Hoare & Co, said CSO year-end figures
could be a fifth lower at about $3,7bn. There would be a
second half recovery, with sales rising to $2,1bn as the
average value of the five sights rose to $425m. The
year-end figure was $4,6bn last year.
Trade journal Antwerp Confidential said the shortage
had "begun to bite". Last month's sight's value was just
more than $300m compared with $250m in March. "In
March, about 50 companies received no goods. This
time more firms were supplied and that figure was
reduced to 40," the journal said.
Investec's Hennie Vermeulen said it was probably too
early to talk of a revival and CSO sales would be about
55% down on the first half of last year.
De Beers spokesman Andrew Lamont said that the
CSO had been cautious in its distribution policy and this
was well received by the trade.
Chaplin also believed that the lower sights were starting
to bear fruit. The pipeline stocks had fallen to the point
where the cutters and polishers might like to see some
increase in the volume coming into the market from the
CSO - and prices, at least for the better quality of
diamonds, remained firm.
De Beers would not comment on speculation ahead of
the CSO's half-year sales results due on June 17, but
said it expected its distribution policy to work. "The
reduced allocation has helped the trade to trim its
inventories," Lamont said.
Retail diamond sales have been sluggish, particularly in
the key Japanese market where the economic crisis has
taken its toll.
29 May 1998 Business Day |
