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Posted: Monday May 30 11:44:15AM 2011
RBC says strong price rises ahead for diamonds
By: Matthew Hill
26th May 2011
Updated 5 hours ago
TORONTO (miningweekly.com) – Analysts at RBC Capital Markets said on Thursday diamond producers and near-term developers will likely be popping champagne corks over the next few years as surging Asian demand props up prices.
In a report on the bank’s fourth yearly diamond conference in London, RBC said the outlook for rough diamond prices was “extremely positive”, as supply struggled to keep pace with growing demand in China and India, and a stabilised US market.
“What this means, we believe, is that diamond prices are likely to increase at rates greater than the recent past as no material new production is coming on stream,” analysts Des Kilalea and Patrick Morton said in the report.
Companies that presented at the conference included Harry Winston, Petra, Gem, Namakwa, Firestone, Lucara, Stornoway and Shore Gold.
“Based on trend analysis from De Beers, if current trends continue, China and India together are forecasted to account for 50% of incremental demand or growth in the world diamond markets over the next five years,” Kilalea and Morton wrote.
In a separate note on Wednesday, the analysts said the culture of buying diamonds in China and India was catching on fast, with China already surpassing Japan as the biggest market after the US.
“It is difficult not to conclude that rough diamond prices will increase strongly as China and India grow and the US recovers fully,” they said.
Risks to their bullish outlook for the sector included the global macroeconomic equation, particularly economic growth in China, but RBC said this was not a major worry.
Any big production increases out of Zimbabwe could also scupper major price increases.
Edited by: Liezel Hill
Miningmx » News » Diamonds
Boom times coming for rough diamonds
Brendan Ryan | Thu, 26 May 2011 13:35
[miningmx.com] -- THE outlook for rough diamond prices is extremely positive and the sector may be “on the threshold of a purple patch”, according to presentations at the fourth annual diamond conference held in London by RBC Capital Markets.
A report by RBC Capital Markets analyst Des Kilalea on the conference stated: “The message was that jewellery demand from new markets like China and India, allied to the bedrock of sales in the traditional United States market, is likely to keep rough diamond prices firm for the foreseeable future.
“It appears that the supply side, in the form of new-mined output, will simply not be able to keep up with the potential growth in demand.”
Kilalea said: “Demand growth in China is very strong and is likely to remain so. While India is some way behind, and its ‘diamond affinity’ is not as strong as in the US and China, sales of diamond jewellery (were) around 30% in 2010.
“As De Beers suggests, the sector may well be on the threshold of a purple patch as two new and growing markets start buying diamonds in a market where new-mined supply is likely to grow slowly, if at all.
“What this means, we believe, is that rough diamond prices are like to increase at rates greater than the recent past as no material new production is coming on stream.
“There will be periods of consolidation and rough price retracement but the outlook is for trend growth for some years.” Kilalea pointed out that solid global economic growth in 2010 drove global spending on luxury goods to an all-time high of €172bn, after the global financial crisis of 2008/2009 had forced the luxury goods market to backtrack by 8% over that period.
The US is still the most important single market, accounting for around 28% of global luxury goods spending, and the 16% recovery in spending in the region was an important contributor to 2010 luxury goods performance.
But Kilalea said: "The 23% growth in greater China to an estimated €17.6bn puts the region within spitting distance of longtime number two player Japan, which remains mired in economic stagnation.
“Based on current trends, China should leapfrog over Japan in 2011. Within the diamond segment the US remains the dominant market accounting for approximately 40% of worldwide consumption.
“Growth in China within the diamond segment has been significant at between 20% and 30% in recent years.
“Based on trend analysis from De Beers, if current trends continue, China and India together are forecasted (sic) to account for 50% of incremental demand or growth in the world diamond markets over the next five years.”
According to De Beers, “China’s fast-urbanising population and growing wealth as well as an ‘affinity for diamonds’ similar to the US will lead to “remarkably strong sales”.
Posted: Friday Apr 29 12:42:50PM 2011
April 20, 2011, 1:47 AM EDT
By Maria Kolesnikova
April 20 (Bloomberg) -- Polished diamonds, beating gold this year, remain “grossly undervalued” relative to uncut gems and will extend gains on booming demand in India and China, WWW International Diamond Consultants Ltd. said.
The CHART OF THE DAY shows polished gems trailing rough diamonds, which rose to an all-time high this year, according to data compiled by polishedprices.com, as supply from mine operators fails to keep up with Asian demand. Cut stones, up 9.6 percent so far in 2011, have still outperformed gold, which climbed to a record $1,497.90 an ounce on April 18.
“Rough has just gone ballistic,” said Charles Wyndham, founder of WWW International and formerly a director at the sales operations of De Beers. “Polished is grossly undervalued. If people are pushing rough skywards because of an anticipated shortage, at the very least the same should apply to polished.”
China recently surpassed Japan as the second-biggest buyer of diamonds, behind the U.S., which consumed 38 percent of production in 2010, according to De Beers. Demand in India grew 31 percent last year, while in China it jumped 25 percent and the U.S. market expanded 7 percent, it said in February.
While rough prices advanced to a record this year, polished gems are below their 1979 all-time high, polishedprices.com data show. Cut stones have risen above levels reached in 2008 before a slump in demand spurred by the global financial crisis.
Rough prices may gain an annual 15 percent to 20 percent in the next two to three years, according to Namakwa Diamonds Ltd. Chief Executive Officer Nico Kruger. “Prices are overheated,” he said yesterday. “There is just no supply, so what else must the big cutters and polishers do? They must buy.”
--With assistance from Thomas Biesheuvel in London. Editors: Tony Barrett, John Deane
To contact the reporter responsible for this story: Maria Kolesnikova at firstname.lastname@example.org
To contact the editor responsible for this story: Claudia Carpenter at email@example.com
Posted: Tuesday Apr 27 9:32:50PM 2010
Translation: DeBeers has as close to a monopoly on diamonds as you can get and they are lowering supply to enhance the price they are getting. They are their own OPEC, only with more market share!
"There is a natural supply-demand imbalance and this is why, De Beers will concentrate on lowering its production for the benefit of nature and humans. "
Gag me with a spoon. Do they really believe people will buy that crap???