The beginning of 2016 has seen an improvement in rough diamond demand following a positive holiday selling season in the United States last year, the group’s latest diamond market update shows.
De Beers’ Group Executive Head of Strategy and Corporate Affairs, Gareth Mostyn told the media this Wednesday in Gaborone that they continue to take a cautious approach in light of the fragile macroeconomic environment. DeBeers, a member of Anglo American group and the world’s largest diamond company has seen its global growth declining by 13 percent in the US dollar terms, largely as a result of the macroeconomic weakness in emerging markets and the strength of the US dollar.
Looking back, slightly weaker than expected sales over the 2014 holiday season in the US and a slowdown in growth in China led to reduced purchases by retailers and hence left the midstream holding higher levels of inventory. This led to a significant decline in rough diamond demand in the second half of 2015 as the midstream sought to rebalance the polished/rough inventory situation.
To date, the US remains the world’s largest market for diamond jewellery sales and increased its share of global polished diamond demand from 42 percent to 45 percent in 2015. India consumer demand reduced by four percent in local currency as it was impacted by a decline in overall consumer spending; whilst the Japanese consumer demand was broadly flat in the local currency terms, but the Yen depreciation led to a 13 percent decline in the US dollar terms.
Demand in the Gulf region declined three percent with oil price weakness and low visitor numbers affecting growth. Chinese growth was positive in 2015, as it saw an overall growth rate of three percent. “We remain very positive despite the volatility. What happens in the short term will be driven by the market trends. The US is again expected to be the main driver of growth in 2016 as well as the growth of the middle classes in emerging markets,” said Mostyn.
He said the company did some segmentation in the US and realised that the millennials still do love jewellery just like the elderly people. “What we need to do is to continue doing more marketing campaigns to the millennial generation and ensure that the demand is simulated. We still remain hopeful in the millennial for demand of our diamonds jewellery,” said the hopeful Mostyn.