De Beers Group chief executive officer, Philippe Mellier, has predicted that there might be some volatility in the diamond industry this year.
Addressing a Sightholder reception yesterday (Jan 20) during the first De Beers Sight of 2016, Mellier said that there were some encouraging signs in the diamond industry at the start of 2016, but he cautioned that the recovery in the diamond sector remained delicate and that there was likely to be some volatility in 2016.
Highlighting some of the positive developments, Mr Mellier stated: “We have seen polished diamond prices start to stabilise and even increase in certain areas, we have seen some encouraging early indications from holiday season sales in the US consumer market and we have seen greater trading activity than at the end of 2015.” However, he also added: “There continues to be uncertainty regarding the macroeconomic outlook, currency pressures have the potential to weigh on downstream demand in a number of locations and we will need to see how retail restocking appetites develop.”
Recognising the crucial role played by a number of midstream diamond businesses in addressing recent difficulties, Mr Mellier said: “2015’s challenges were very different from those presented by the demand crisis that followed the 2008 downturn, but that does not mean they were any less difficult to deal with…We all had to take difficult decisions, considering trade-offs between what was right for our businesses and what was right for the industry. We all had to absorb the impact of negative trading conditions in the short-term so as to protect the industry’s long-term interests. And we all had to employ our hard-earned experience and expertise to navigate through some very difficult times.”
Setting out De Beers’ approach to supporting and accelerating improvements in the diamond industry, Mr Mellier stated that De Beers would focus on both supply and demand. Supply-side actions will include a reorganisation of the Global Sightholder Sales business unit, while on the demand side Mr Mellier stated that De Beers would continue to invest in non-proprietary marketing in 2016 so that it could “ensure that consumers – young and old, eastern and western – continue to celebrate their own facet of forever with the magic of diamonds”.