De Beers sorting – Page 2 – The Diamond Certification Laboratory of Australia (DCLA)

De Beers Lets Sightholders Defer Chinese Goods

De Beers has allowed clients to forgo buying certain rough diamonds at this week’s sight, as the coronavirus outbreak has raised concerns about a polished glut.

The miner has let sightholders defer purchases of goods that produce the types of polished popular in the Chinese retail market, a source at the sight told Rapaport News Wednesday. The concessions apply to 1- to 2-carat rough diamonds that can make polished under a carat, as Chinese demand is highly focused on that size category, especially the 0.30- to 0.50-carat range.

Instead of taking up those allocations at this sale, the second of the year, customers will be able push them back to sights 3, 4 and 5. Those who already deferred their supply from the last two sales of 2019 will only be able to delay their purchases to sight 3, which begins March 30.

“People are very afraid of the market, and stocks are building because there are no sales to the Far East,” the source said on condition of anonymity. De Beers declined to comment on the move.

De Beers apportions rough supply to sightholders based mainly on their purchase history, and divides those allocations across the 10 sights that take place during the year. Clients can usually defer only a limited proportion of the goods earmarked from them, but the miner has provided more flexibility of late because of the weak market.

In the second half of last year, De Beers offered unprecedented measures, such as letting customers refuse half of the goods in a box or sell up to 30% of their rough purchases back to the miner.

It ended the special rules at the December sight, as an oversupply of polished in the midstream started to ease. However, the coronavirus epidemic has lowered jewelry demand in China, where the outbreak started, creating uncertainty about manufacturers’ ability to sell their polished. Concerns escalated this week when it emerged the disease had spread beyond the Far East to Europe and Iran.

“The virus has the potential to badly damage the market for the next few months, but we don’t know [the extent of the impact],” an executive at a Mumbai-based sightholder commented. “If it goes on for a long time, it will be a problem not only for De Beers, but for many, many companies in India.”

Source: Diamonds.net

Virus Likely to Impact Demand at De Beers Sight

De Beers and its clients expect a slowdown in rough-diamond sales at the company’s Botswana sight this week amid concerns about the coronavirus.

“It’s fair to say there will be an impact on rough demand in the short term,” De Beers chief financial officer Nimesh Patel said Thursday in an interview with Rapaport News. “I’d expect we’d see that at the [February] sight.”

The downturn in China’s retail market due to the virus outbreak has left manufacturers uncertain how long it will take them to sell diamonds they cut. Companies that supply to that region have been especially affected.

Rough that can produce polished with clarity above VS has shown weakness in recent tenders due to the lower Chinese demand, one sightholder said on condition of anonymity. Lower-clarity items destined for the American market have performed better, he added.

“It’s a mixed picture,” the sightholder explained. “People that are strongly focused on the Far East will be reluctant to buy, while those that work with the US and maybe Europe still seem to be going OK.”

De Beers will hold back goods rather than lowering prices, the dealer added, predicting that the sight would be small in value. The miner has kept prices stable for the sale, which began Monday, two sightholders confirmed with Rapaport News.

Another De Beers client expected buyers would take up most of their allocations at this sight, but said the next sale beginning March 30 would be weak if the coronavirus difficulties were still going on.

“I’m hopeful this crisis might not last more than two or three weeks,” he said.

Meanwhile, Patel pointed out that some goods could be rerouted from China to other markets, while certain constant sources of demand, such as weddings, would be delayed rather than disappearing completely. In addition, the midstream has started the year with relatively low inventories due to a reasonably strong fourth-quarter holiday season, putting it in a good position to weather the difficulties, he said.

“We’ve been through periods like this before in the industry,” the executive said. “This is, hopefully, a one-off impact, and the sooner the virus can be contained, and the sooner we can get back to the normal operation of those economies, the better.”

Source: Diamonds.net

De Beers Optimistic After 2019 Earnings Slump

Rough and polished diamonds next to each other at De Beers

De Beers gave a positive outlook for 2020 due to an improvement in the industry’s inventory situation, despite growing concerns about Chinese demand.

Early data from the holiday season indicate midstream stock levels are more balanced than they were, the company reported Thursday in parent company Anglo American’s annual financial results.

The miner maintained its production forecast of 32 million to 34 million carats for the year, citing a “currently anticipated improvement in trading conditions compared with 2019.”

Last year was the worst for De Beers in the past decade, as rough demand plummeted amid an oversupply of polished in the manufacturing and trading sector.

The miner reported that underlying earnings slid 87% to $45 million, while revenue fell 24% to $4.61 billion, its lowest level since the financial crisis.

Rough sales declined 26% to $4 billion, with volume down 8% to 30.9 million carats. De Beers’ average selling price slumped 20% to $137 per carat, reflecting a 6% decline in like-for-like rough prices, as well as weak demand for higher-value diamonds.

Sales from other divisions, which include the Element Six industrial-diamond unit and Lightbox, its lab-grown brand, fell 17% to approximately $570 million, according to Rapaport calculations.

Last year started on a weak note, as stock-market volatility and the US-China trade war led to sluggish 2018 holiday sales, leaving the trade with higher stock levels than it had expected, the company explained.

The situation worsened as US retailers took more goods on memo and pruned their physical-store networks, while consumers shifted further to online buying, reducing the need for inventory.

The midstream also suffered from tight bank financing, dampening demand for more rough, De Beers noted.

De Beers observed “stable” consumer demand so far in 2020, especially in the US, but cautioned that several uncertainties — including the coronavirus outbreak — could pose a threat.

An increase in online purchasing has caused retailers to destock, while US-China trade tensions and geopolitical escalations in the Middle East could also affect economic growth and consumer sentiment, the company added.

Source: Diamonds.net

De Beers Issues Synthetics Guidelines

De Beers has provided its rough-diamond clients and Forevermark partners with guidelines on how to operate in the lab-grown market if they wish to continue tapping into its branding.

The mining company, which in 2018 forayed into gem-quality synthetics with the launch of its Lightbox brand, is demanding businesses make full disclosure about their product, segregate synthetics from their natural supply, and do not make unproven claims about either category. The “Statement of Principles” outlines the legal structures companies with lab-grown diamond units must have if they wish to use the sightholder logo, as well as the procedures and training they are required to implement to avoid contamination or misleading marketing.

While De Beers already had rules mandating disclosure and other best practices, the new principles “ensure there is no room for doubt” about how clients may use the sightholder logo, explained David Johnson, head of strategic communications for De Beers. Some of the rules form part of De Beers’ contract with clients, allowing the miner to penalize those who flout them, while others are only recommendations.

“We believe the principles within the document set out a responsible approach, and that they are important for ensuring people can make clear and informed choices about what they are buying,” Johnson added.

The document refers to lab-grown diamonds as “artificial” products that “do not have the same inherent, naturally occurring characteristics or enduring value” as natural diamonds. The miner continues to define diamonds as a natural mineral in line with the International Organization for Standardization (ISO).

De Beers sent the guidelines to clients earlier this month, as numerous sightholders have launched lab-grown businesses under separate entities and trading names.
The following is a summary of the guidelines:

De Beers customers may only use the sightholder license — including displaying the sightholder logo — for business entities that are exclusively natural-diamond businesses. Entities with both natural and lab-grown activities may not use the logo.
The miner recommends setting up distinct and independent businesses for any lab-grown diamond activities, with separate systems, processes and workforces.
The rules prohibit “false, misleading or unsubstantiated” claims about the enduring value of lab-grown diamonds, whether directed at other businesses or at consumers. They cannot state or imply that lab-grown diamonds have the “identical inherent value characteristics” as natural diamonds.
Similarly, unproven claims about the environmental benefits or ethical advantage of lab-grown diamonds over natural ones are forbidden.
Sellers must provide the buyer with full and unambiguous disclosure before the transaction is complete.
They’re also required to ensure segregation at all stages of the supply process, such as storage, cutting and polishing, packaging, and transportation. Ideally, suppliers should handle natural and lab-grown stones in separate sites.
De Beers customers must “take steps” to ensure full disclosure and segregation further along the supply chain, down to the consumer.
Clients must have protocols to identify and mitigate contamination risks, and train staff members on the “operational, commercial and reputational impacts” of lab-grown diamonds.
Preferably, companies should disclose the countries in which the synthetic diamond was grown, polished and made into jewelry, as well as the identity of the grower. De Beers says businesses should “strive” to declare this, though it’s not an absolute requirement.
Grading language must contain words that make it clear a stone is lab-grown.
Customers must follow relevant laws, regulations and best practices, such as the standards that the US Federal Trade Commission (FTC) and the ISO have published.

Source: Diamonds.net

De Beers Lets Clients Delay Rough Purchases

De Beers loosened its purchasing requirements for rough buyers at last week’s sight in an effort to ease the oversupply affecting the diamond market.

Sightholders have struggled to reduce their inventories due to an imbalance of stocks and weak polished demand. To tackle the problem, De Beers allowed its customers to defer purchases from the July sight to other sales later this year, a spokesperson confirmed Thursday.

De Beers’ long-term sales program compels customers to show certain levels of demand at sights, which take place 10 times a year in Botswana. They are free to push off buying one box per “band” (selection of goods) per half year, but only from one sight to the next. However, at last week’s sale, sightholders were able to make an extra deferral, and could also delay to later in the year, not just by one sight.

In addition, the company has brought forward sightholders’ annual opportunity to reschedule their purchases, known as “re-phasing.” This year, that will occur after the July sight, the sixth of the year, whereas it’s normally scheduled for the eighth sight.

De Beers’ revenue and profit fell in the first half, as a buildup of excess polished goods in the midstream and retail sectors hit rough demand, the company explained last week in its half-year earnings. A price reduction at the June sight helped sightholders deal with the weak profitability they are facing, De Beers chief financial officer Nimesh Patel told Rapaport News Thursday.

The miner also lowered its production forecast to 31 million carats for this year, compared with an earlier outlook of 31 million to 33 million carats, Patel noted. Output in 2018 was 35.3 million carats.

Holding back rough

The combination of lower production and prices, together with increased purchasing flexibility, should tackle the “short-term” crisis, Patel predicted. The company also experienced a “meaningful increase” in its own rough inventories during the first half because it held back rough, he said.

“We’ve clearly reacted in terms of price, so we’ve injected profitability back into goods,” the executive said. “Secondly, we’ve reacted in terms of production…. Alongside that, we’re working with our customers to offer them more flexibility in the way they purchase, so [we’ve introduced] re-sequencing of the timing of their purchases of goods through the course of the year, which is something that we’ve allowed [them] to do, and we’ve added to that additional referrals as well. All those things will see us through this difficult period.”

The problems come from within the diamond industry rather than from outside: Growth in global gross domestic product supports consumer demand for diamond jewelry in the long term, Patel said. The US retail market is increasing, while sales in China and India are also rising in local currencies, he observed.

However, weak fourth-quarter holiday sales in 2018 and shaky consumer demand in the first half has made it difficult for the industry to offload polished stocks to retailers, Patel said. Consumers’ shift away from lower-end shopping malls has forced some companies to close stores and liquidate their goods, he added. Furthermore, retailers’ increased reliance on consignment has raised inventory risks for the midstream, as failure to make a final sale often forces suppliers to resend jewelry items to a different client, or to dismantle and remanufacture the jewelry, he explained.

“That doesn’t help the midstream in terms of sell-through,” he noted.

Yet the near future is positive because the issues are “specific to the balance of stocks in the midstream and the downstream,” Patel argued. “It’s a function of that excess polished as it sits today…just working its way through the system. As that happens, we should see polished prices perform better [and] rough demand return.”

Source: Diamonds.net