Everybody else has been saying it for some time now, but De Beers finally came out and admitted during the presentation of its half-yearly results that what remained of 2008 didn’t look good for diamonds, because “in the credit crunch, new bling is one of the first luxuries to go.” De Beers also admitted that “strong growth in China, India, Russia and the Middle East could not offset the fall in the west.” It’s all here in the Evening Standard’s news briefs.
De Beers’ mood contrasts sharply with that of Indian jewellery and luxury apparel purveyors who are rejoicing because the institution of the “big, fat Punjabi wedding” is working wonders for their business. Mind you, even in the Indian bridal market, there are signs that expenditure is being cut back. Indian jewellery retailers are also nervous about the upcoming Diwali festival season, when typically they make 70 per cent of their annual sales, because the signs don’t look good. But all in all, the Indian market is in much better shape than the US or Europe.
But it isn’t all gloom for the diamond industry – even if base metals have assumed more importance to miners. London’s Financial Times commented: “De Beers is an iconic brand that is intricately linked to the history of the Anglo American group. However, its importance to its parent company has been overtaken by less glamorous products such as copper and iron ore. Diamonds were the smallest earner of Anglo’s six business divisions last year, contributing $239m of underlying earnings compared with $3.1bn from the base metals division and $605m from ferrous metals. But Anglo continues to see diamonds as a core business and will keep backing De Beers for the foreseeable future. De Beers is expecting its production volumes to pick up as new mines in Canada come on stream, and in spite of the gloom surrounding the impact of a US slowdown on jewellery demand, the group is optimistic about long-term diamond prices.”
If you’re a member, you can check out the FT’s full report here.
