- Challenges would persist in the short-term
- Market expected to return to growth in 2025
De Beers experienced a notable decline in revenue, dropping to US$4.3 billion in 2023 amidst challenging industry conditions prevalent during the year. This downturn marked a decrease from the US$4.6 billion recorded in 2022, with rough diamond sales decreasing to US$3.6 billion compared to US$6 billion in the previous year.
Production for the period under review stood at 31.9 million carats, down from 34.6 million carats in the prior year. Simultaneously, capital expenditure rose to US$623 million, up from US$593 million in 2022.
Paul Rowley, De Beers’ Executive Vice President for Diamond Trading, highlighted several major challenges facing the diamond industry during a media briefing this week. These challenges included a sluggish post-COVID-19 recovery in China and a cautious approach by jewelry retailers towards purchasing new stock.
In 2023, macroeconomic challenges and an increased supply of lab-grown diamonds impacted US consumer demand for natural diamonds. While sales of lab-grown diamonds to consumers rose, wholesale prices for lab-grown diamonds continued to decline sharply, further distinguishing them from natural diamonds.
De Beers reported that economic challenges in China resulted in low consumer confidence, leading to a marginal contraction in consumer demand compared to the subdued levels seen in 2022. Conversely, consumer confidence and demand growth in India remained robust throughout 2023, particularly towards the end of the year.
The company’s financials for 2023 indicated that a retail slowdown contributed to inflated midstream polished diamond inventories, which increased over the year, subsequently exerting downward pressure on wholesale prices for polished diamonds. Consequently, the midstream industry in India implemented a voluntary moratorium on rough diamond imports between October 15 and December 15.
Rowley explained that De Beers supported its Sightholders by offering full flexibility for rough diamond allocations for Sight 9 and Sight 10 as the midstream sought to re-establish equilibrium. This strategy resulted in low rough diamond sales in the fourth quarter. However, industry conditions are believed to have begun stabilising during this period, with retail demand improving notably over the end-of-year holiday season, particularly in the United States, which helped alleviate midstream inventory pressure.
Looking ahead, Rowley predicts that the market will stabilise by 2025. He noted, “Short-term industry conditions are expected to remain challenging. Sales are still historically low, and limited consumer growth and ongoing retail caution are anticipated in the short-term.” Rowley expressed optimism for a gradual recovery, with an expected return to growth in 2025.
