OT De Beers Expected to Sell Nearly a Third More Gems at Sale on U.S. Demand
By Antony Sguazzin
De Beers' Diamond Sales Seen Rising on U.S. Demand (Update2)
(Rewrites 1st, 3rd paragraphs.)
London, June 8 (Bloomberg) -- De Beers, the world's top
diamond company, is expected to sell nearly a third more gems at
its fifth sale of 1999 than last year, as the company benefits
from U.S. demand, analysts said.
De Beers' sales arm, the Central Selling Organisation, will
sell about $457.5 million of diamonds, about 31 percent more than
last year's fifth sale, according to the mean estimate of four
analysts who surveyed buyers before this week's sale.
The increase would be the company's sixth straight rise in
sales as U.S. consumers, who account for about 45 percent of
global diamond demand, help De Beers recover from last year, when
the CSO recorded its lowest sales in 11 years, analysts said.
''The big story is in the U.S.,'' said Alan Cooke, an
analyst at Rice Rinaldi Securities in Johannesburg. ''Japan is
looking a little better although it is still mired in
recession.''
Yesterday, the U.S.'s Federal Reserve said Americans'
personal debt rose by $3.7 billion in April to $1.335 trillion
indicating that they expect the economy, already in its ninth
straight year of growth, to continue expanding.
''Consumers have soaring personal incomes as well as rising
wealth from an ebullient stock market -- that's a very powerful
combination,'' said Richard Yamarone, a senior economist at Argus
Research Corp. in New York. ''They can pay off this debt.''
Demand for gems in the U.S. will only fall when the Dow
Jones Industrial Index of leading stocks, which has climbed 19
percent this year, drops, said diamond analysts in Johannesburg.
''It's the wealth effect,'' said Keith Bright, an analyst at
Fedsure Asset Management. Diamond demand will fall ''when the Dow
goes for a bit of a loop.''
Above Expectations
De Beers total sales for the first half of 1999 are expected
to be between $.1.98 billion and $2.125 billion, according to the
analysts, compared to $1.7 billion last year. De Beers will
announce half-year sales on June 22 but doesn't give details of
individual sales.
''This is way above the expectations of people at the
beginning of the year,'' said Bright.
Meanwhile, the company, which last year announced that it
would review how it conducts business, has appointed Boston-based
Bain & Co. as a consultant to help it to trim costs, said the
analysts.
De Beers is also still locked in a dispute with South
Africa's government diamond valuator over export taxes that has
led to a ten-week block on exports of gems from the country, the
world's third biggest producer by value.
Diamond stocks worth close to $5 billion held by De Beers in
London will enable it to keep supplying the global gem market, of
which it controls about 70 percent.
De Beers rose as much as 80 cents to 140.20 rand.
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