Following De Beers’ August sight, Paul Rowley, the company’s executive vice president of global sightholder sales, spoke to JCK about the current state of the diamond market.
JCK: There are reports that De Beers lowered prices at its August sight 9 to 10 percent. Is that true?
Rowley: We won’t give numbers, but we have reduced prices. If you look at the half-year results, we have reported that prices decreased 8 percent.
Polished prices are under pressure, and there is an overhang of polished coming into the market. Our response has been a significant cut in production and to allow our sightholders more flexibility and to make a greater investment in marketing. We feel that is the proper response.
JCK: What caused the current problems?
Rowley: We are coming off the back of last year, which was a very good year. At the beginning of this year, there was probably too much supply, goods [were] caught up in the GIA, and the growth in China at the first half of last year didn’t translate to a similar growth this year. That created indigestion and a bit of an overhang of polished in the market.
At the end of the day, there remains good consumer demand. The U.S. remains robust. It’s just that consumer demand is not growing at the rate at which we anticipated. We expect a similar year [as far as global diamond demand] to last year, which is not a bad space to be in.
JCK: Are sightholders finding the assortments profitable?
Rowley: There will always be different opinions. Some have said: Don’t move prices at all. It depends on individual business. No two businesses are the same. Some businesses have excellent efficiencies, while some people say their businesses are going through more difficulties. We try to appropriately price our rough at the time we present it. We felt the time was right to make adjustments.