At the beginning of this year, Alrosa and De Beers had halted supplies to boost demand. It seems their strategy is paying off...
The diamond drought appears to be over. The world's two largest diamond mines are back to selling gems after pausing transactions to stop a price decline, Bloomberg reports.
In recent months, industry heavyweights have taken drastic measures to counter low demand and high supply. In September, Russian company Alrosa stopped all sales for two months. The South African-British company De Beers soon followed suit, suspending all online auctions for raw diamonds in October. India, which processes and polishes 90 percent of the world's raw diamonds, also introduced a two-month pause in imports in September, while Botswana's Okavango Diamond Company canceled its auctions in November and December. The strategy seems to be paying off.
Sales have resumed and there have been some price increases in the market, according to Bloomberg. Alrosa reportedly began reselling raw diamonds at the end of November, selling gems worth over $100 million. De Beers has also resumed sales and earned a similar amount, according to people familiar with the situation. Additionally, the Indian diamond industry recently announced that it will lift its voluntary import ban as market conditions have improved.
The diamond industry flourished at the beginning of the pandemic, when wealthy collectors bought jewelry from their homes. However, demand quickly declined, and growing economic difficulties deterred buyers. (Markets in the US and China particularly suffered a sharp downturn.) At the same time, lab-produced diamonds began to gain in popularity. As a result, many diamond sellers were overwhelmed with excess inventory for which they had overpaid. The solution was to reduce supply to increase demand. De Beers has a long history of stockpiling goods to prevent price drops, as Bloomberg points out.
There have been some price increases for raw diamonds, but experts are still concerned that the large stocks held by mines could stifle any recovery. The industry's recovery also depends on the strength of sales during and after the key holiday season.
