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De Beers cites market improvement

By Whitney Sielaff
April 21, 2009

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New York--Positive statements about improving conditions in the diamond sector continue to flow from De Beers, which says the market has gained increasing momentum since a low point in 2008.

"While still at lower-than-normal levels, diamond sales have been steadily increasing since the end of last year," company spokeswoman Lynette Gould said in an e-mailed statement to news agency Bloomberg.

Gould also said the company is optimistic about realizing its 2009 financial targets.

Gould's statement comes after another last week from De Beers Botswana Chairman Stephen Lussier announcing the resumption of mining operations in that country.

"We have begun to see signs of improvement in the market and expect this to continue as the year unfolds," Lussier said.

These statements are welcome to companies engaged in the diamond business, the single largest product category for U.S. retail jewelers. According to dealer reports, diamond trading came to a near standstill in the pre-holiday 2008 months following the stock market and economic crashes of mid autumn.

While retail jewelers saw steep sales declines through the holidays and into early 2009, the diamond-supply sector was seen to be hit even harder.

This is the first time the diamond trade has faced a severe down market since De Beers restructured from its role as a marketing cartel. Under that model, the company stabilized prices by controlling the supply of rough diamonds entering the distribution pipeline.

Polished-diamond prices have become more volatile since. Together with more stringent practices instituted by the market's traditional financial lenders, weakened sales and increased price volatility have posed significant challenges for diamond manufacturers, wholesalers and dealers.
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