Picture: THINKSTOCK
Picture: THINKSTOCK

ALL eyes in the diamond industry are on jewellery sales around the Chinese New Year next month after a positive, but unspectacular year-end performance in the US, analysts say.

The rough diamond producers, particularly the large ones such as De Beers and Russia’s Alrosa, closely follow the year-end sales in the US, where a third of the world’s diamonds are sold in a six-week period in the single largest market for diamonds.

De Beers has poured tens of millions of dollars into diamond advertising in the US and China to invigorate jewellery sales as part of a strategy to unclog the manufacturing pipeline and boost demand and prices for rough diamonds.

Rough diamond prices fell by between 15% and 20% last year, said RBC Capital Markets diamond analyst Des Kilalea.

"We do not see any realistic prospect of firmer prices year-on-year, though some categories should improve," he said. Early and scant information from both the US and China show a mixed year-end performance, he said.

Chow Tai Fook, which De Beers describes as a leading jeweller in China, Hong Kong and Macau, reported gem-set jewellery sales falling 7% in the quarter to end-December and gold product sales down 3% in Hong Kong. In Macau, both classes of products fell 16% and 24%, respectively.

The Chinese New Year starts on February 8 and buying is likely to pick up before then.

"Commentators in cutting centres are not particularly bullish about New Year sales in China, however," Mr Kilalea said. In the US, indications were jewellery sales for the year-end were about 3% higher, he said.

De Beers, 85%-owned by Anglo American, will have its first sale on Monday and estimates in the market are that it will put about $350m worth of rough diamonds up for sale.

De Beers CEO Philippe Mellier, as part of his commitment to make the diamond industry more transparent, said last year the company would make public the results of the sales.

The performance of the diamond market this year hinged in part on the supply side discipline of De Beers and Alrosa and what further cost cuts they made in their rough diamond sales, Mr Kilalea said.