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De Beers predicts ‘challenging’ year; India key to growth
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DE Beers, the world’s largest diamond producer, said yesterday that the economic slowdown in China and a strong US dollar meant a “challenging” year for the industry, while India would be key to future growth.
Analysts have said global diamond prices could tumble due to a glut as consumer demand weakens.
De Beers announced in July that its underlying earnings had slumped 23 percent in the first half of 2015 and revised down its production forecast.
“We expect 2015 as a whole to be a more challenging year,” CEO Philippe Mellier said in the company’s new “The Diamond Insight Report.”
“The continued strengthening of the US dollar against all major currencies, coupled with a slowdown in economic growth in China, is likely to lead to global diamond jewelry demand for the full year being relatively flat compared with 2014 levels,” the report added.
Diamonds are typically denominated in US dollars.
Mellier predicted strong growth would return “once the current stocks have worked through the system.”
Turbulence in the Chinese economy saw the devaluation of the yuan and a stocks crash.
It came on the heels of an anti-corruption drive by Chinese President Xi Jinping which has dented the luxury market.
“The challenge in China is that we all got used to growing at exorbitant rates ... the industry is having to re-adjust itself,” said Stephen Lussier, CEO of De Beers’ Forevermark jewelry brand.
But the company is still “bullish” about China’s role in future, said Lussier, who is in Hong Kong for a jewelry and gem fair.
China accounts for 16 percent of global diamond sales, the second-largest market after the US on 42 percent. India is third with 8 percent.
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