Diamond Sales in October!

[Michael Alexander]

ANGLO American may be facing headwinds in its platinum and copper businesses, but at least rough diamond revenues received a much-needed boost with De Beers registering its best "sight" this year.
Analysts estimate some $750m worth of unpolished diamonds were sold in the latest October sight, higher than the $600m and $325m estimated to have been sold in the September and August sights respectively.
De Beers' marketing company, the Diamond Trading Company (DTC, the brand of which is due to be phased out), holds ten sights per year, in which approved buyers of unpolished diamonds are invited to buy a mix of diamonds from the producer. Times have been difficult in the diamond market, however.
Earlier this year, the DTC took the unusual step of allowing diamond buyers to defer payment for half of their goods until end-March, 2013. Some of those deferrals were brought into the October sight.
According to Peter Davey, an analyst with SGB Securities, some $4.74bn in rough diamond sales has been collected by the DTC in the year-to-date.
As a result, he adjusted forecast full-year sale upwards to $5.3bn from a previous estimate of $4.94bn. The DTC sold $6.5bn in 2011. At the half-year point this year, it had sold $3.1bn, some $400m less than at the interim stage in 2011.
This is good news for Anglo American, which in August finalised the purchase of the Oppenheimers' 40% stake in De Beers for $5.2bn. Anglo now has a stake of 85% in the diamond company.
Des Kilalea, an analyst for RBC Capital Markets, agreed the DTC had a good month in October but that was owing partly to a carry-over of the diamonds, the purchase of which buyers were allowed to defer in the first half of the year.
The DTC dropped prices about 10% in the August sight but maintained those prices in the October sight – a development that would not please sightholders who were simultaneously having to make up on deferrals, Kilalea said.
Regardless, the high sales for DTC this month should position it for a strong run in the final quarter of the year, with a combination of three festivals: Diwali, Thanksgiving and Christmas traditionally giving sales a strong finish.
Davey estimated De Beers would produce between 28 million to 29 million carats of diamonds this year. At the half year point, De Beers had produced 13.4 million carats of diamonds compared to 15.5 million carats at the interim stage in 2011.