Industry under pressure as Covid hits India
Signs that the diamond industry was slowly starting to sparkle again have been dented by the outbreak of the second wave of Covid-19 in India.
Having started the year on a positive note, the devastating impact of Coronavirus in India, a key market for diamonds, threatens to plunge the industry into disarray once again.
Since the middle of April, India has been recording around 300, 000 new cases every day, with the daily death rate regularly exceeding 3, 000.
Meanwhile, the recent figures availed by Anglo American, De Beers parent company, show rough diamond sales value amounted to US$380 million (P3.8 billion) for the 4th cycle of the year.
This is a decrease from US$450 million registered during the third cycle of sales. It is, however, a vast improvement on the US$56 million recorded in the fourth cycle last year when most countries went on lockdown.
Although De Beers group Chief Executive Officer (CEO), Bruce Cleaver says they continue to see robust demand for jewelry in the key U.S and China markets, he notes the outbreak in India has hurt the market ‘badly’.
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“The scale of the second wave of Covid-19 in India, where the majority of the world’s diamonds are cut and polished, has led to reduced midstream capacity and subsequently lower rough diamond demand, during what is already a seasonally slower time of year for midstream purchases,” said Cleaver.
In response to the circumstances brought about by the pandemic, particularly the global restrictions on the movement of people and products, De Beers had continued to implement a more flexible approach to rough diamond sales during the fourth sales cycle of 2021. This included extending the sighting event, where prospective buyers get to view the diamonds, beyond their normal week-long duration.
Due to the pandemic’s far-reaching impact, last year De Beers saw its rough diamond production go down by 14 percent to 6.7 million carats as measures were put in place to respond to the lower demand for rough diamonds. The drop in demand is said to have been caused by the Covid-19 pandemic as well as operational challenges at Orapa that led to lower than expected production.
De Beers has previously revised its production guidance to 32-34 million carats for 2021, from 33-35 million carats which subject to trading conditions, due to ongoing operational challenges and lower expected production from the final cut at Venetia, De Beers’ Canadian mine.