De Beers CEO Sees US Diamond Demand Recovery

De Beers Group, the world's leading diamond producer, is seeing signs of recovery in US diamond demand, according to its CEO, Al Cook. In an interview with Bloomberg TV, Cook expressed optimism about the market's prospects for 2024, citing increased US purchases of jewelry and watches in October and November 2023 as evidence of a rebound.

Cook acknowledged that 2023 was a challenging year for the diamond industry, with lower demand driven by a combination of factors, including a fall in economic growth, a lag in engagement rates in the US and China, and competition from lab-grown diamonds. However, he sees less competition from lab-grown diamonds in 2024, as their prices have fallen significantly in recent years.

According to StoneAlgo's lab-grown diamond price tracker, the average price of a one-carat lab-grown diamond fell over 37% in the past 12 months, from more than $1,200 in February 2023 to around $750 today. In comparison, natural diamond prices have fallen less than 19% over the same period.

Cook believes that customers now recognize the difference between natural and lab-grown diamonds, which has shifted retailer financial incentives towards natural diamond jewelry. To capitalize on this recovery, De Beers is implementing strategic initiatives, such as investing in advertising and retail expansion, collaborating with leading jewelry retailers, and supporting consumer confidence in natural diamonds.

De Beers' rough diamond sales for Cycle 1 (representing sales between 19 December 2023 and 30 January 2024) increased by 170% sequentially, reaching $370 million. This increase was primarily driven by US holiday demand and the resumption of sales in India. Although sales are still below previous Cycle 1 sales, this is De Beers' highest sales value since Cycle 7 2023, indicating a positive trend in the US market.

Analysts at Jefferies noted that De Beers' sales troughed in the US, suggesting that a soft landing for the US economy could support a recovery in diamond earnings. This is crucial for De Beers, as the US is a key market for diamond jewelry.

In conclusion, De Beers CEO Al Cook sees signs of recovery in US diamond demand, driven by increased purchases of jewelry and watches in late 2023. The company is implementing strategic initiatives to capitalize on this recovery and maintain market share against lab-grown diamond competitors. With the US being the world's largest diamond market, any improvement in demand from this region can have a significant impact on De Beers' overall sales and revenue projections for 2024 and beyond.