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Weekly Market Report

DIAMOND MARKET OVERVIEW

Polished trading volumes in the main diamond centres slowed this past week, partly due to the Jewish holidays. In India, there were reports of some businesses, selling polished at discounted prices to reduce inventory. Meanwhile, in the US, traders reported steady demand from retailers ahead of the all important holiday season.  NRF, the largest US retail federation, gave a positive outlook for the last two months of the year, saying it expects holiday retail sales in November and December (excluding automobiles, gasoline and restaurants) to increase between 3.6 and 4% to $678.75 billion and $682 billion, up from $655.8 billion last year. “Although this year hasn’t been perfect, especially with the recent devastating hurricanes, we believe that a longer shopping season and strong consumer confidence will deliver retailers a strong holiday season,” NRF said. The main polishedprices index ended the week virtually unchanged, opening at 117.66 on Monday, from 117.86 at Friday’s opening.

ROUGH MARKET

Traders in the secondary market said tight liquidity and concerns about further bankruptcies was denting trading activity. In addition, cutting factories are reducing capacity ahead of the Diwali holiday that start on October 19th. Traders will be closely watching the De Beers sight this coming week. Said one trader: “People very pessimistic and hoping that the two main producers (De Beers and Alrosa) will reduce prices. Most manufacturers need a 10% reduction to return a sustainable level of profit.” Although rough sold by Alrosa was reportedly overall more expensive compared to Be Beers, traders said the Russian state company provided more flexibility in its sales policy. “They don’t sanction if you take only a small part of rough,” said one trader. 

CORPORATE AND EVENTS

De Beers, which will be down to a single mine in South Africa from 2020, has 54 exploration applications stuck with the Department of Mineral Resources, some for two years, and has suspended its R40m annual exploration budget in the country, Business Day reported. The focus of De Beers Consolidated Mines (DBCM), the South African subsidiary of De Beers, the world’s largest producer of rough diamonds by value, is on bringing its $2bn Venetia mine into production and managing the transition from opencast mining to underground mining, minimising the anticipated dip in production at that time, said DBCM CEO Philip Barton, said the Business Day report.

It’s been a surprisingly ugly year for most diamond companies. Shares of small producers, mainly focused on mines in southern Africa and Canada, have tumbled more than 30 percent during the past year and each company seems to be embroiled in its own mess, Bloomberg reported. The issues range from mine setbacks, political fights and low prices for certain types of stones. The volatility is normal for such a speculative corner of the industry, but the losses are surprising since rough-diamond prices have held up relatively well, said the Bloomberg report.

Firestone Diamonds attributed a drop in the average realised value from $107/ct to an average value of $69/ct to the continued lower frequency of higher-value diamonds and a subdued market during the period under review, miningweekly.com reported The Aim-listed company sold 195 330 ct of diamonds during its latest diamond sales, held in July and September, in Antwerp, netting about $13.5 million in proceeds, according to the miningweekly.com report. Firestone noted that the variability in average diamond values at Liqhobong diamond mine – which the company has experienced to date from mining in the lower grade areas of the openpit – is expected to ease as higher-grade kimberlite areas are mined and treated, the miningweekly.com report said. “[In the overall market environment], a combination of oversupply and the previously reported Indian demonetisation programme is still having an impact on the lower-quality run-of-mine goods, as well as the fact that the summer months are traditionally the quietest time in the rough selling season,” the company said in an operational update on Friday September 29th, said the miningweekly.com report.

AIM-quoted Firestone Diamonds has recovered its largest diamond to date, a 134 carat gem-quality light yellow diamond from its Liqhobong diamond mine in Lesotho, miningreview.com reported.

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