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USA:Diamonds to glitter at high prices – De Beer’s forecast |
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2004-11-17
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 Rising prices have been forecast by De Beers, the world''s largest diamond seller as production falls short of demand in the $57 billion market for diamond jewelry.
This witnessed three price hikes by Johannesburg-based De Beers. Mining companies led by De Beers and London-based Rio Tinto Group accelerated their search for stones after sales of diamond rings, necklaces and other jewelry rose 10 percent this year, said Chaim Even-Zohar, an analyst at Tacy Ltd., a diamond industry consulting firm.
``We do not believe there is a diamond shortage, only a diamond opportunity, one that will deliver sustainable price growth,'''' De Beers spokeswoman Lynette Hori said in an e-mail. The company said July 23 that a 14 percent jump in prices in the first half drove up net income by 26 percent to $341 million.
To disccuss on the industry outlook, diamond producers, government officials, jewelers and merchants are meeting in Antwerp, Belgium, the world''s largest center for cutting and polishing gems, for a two-day conference that began yesterday. Diamond prices vary from less than $200 to more than $1,000 a carat, said James Picton, a consultant to U.K. stockbroker W.H. Ireland Group Plc. Projects such as Rio Tinto''s Davik mine in Canada may not be enough to satisfy growth in demand, with global sales forecast to rise about 50 percent to $14 billion by 2010, he said.
``Somewhere around 2007 or 2008 we''ll have diamond shortages,'''' Tacy''s Even-Zohar said in a phone interview from Tel Aviv. ``We have to find new mines.'''' Without new production, cutters in cities like Antwerp will use up inventories, he said.
The US tops as market largest market for diamond jewelry with a 55 percent share, followed by Japan. With country’s economy estimated to grow at 3.9 percent this year by Morgan Stanley, is fueling rise in consumers'' incomes and jewelry sales, Even-Zohar said.
Retailers may not be able to pass on to consumers all of their higher diamond costs. New York-based Tiffany & Co., the largest U.S. luxury jewelry chain, said on Nov. 11 that third-quarter net income fell 26 percent, in part because higher prices for the gems trimmed margins.
``We have increased retail prices to take into account gold and diamond costs,'''' said Tim Jackson, a spokesman for Signet Group Plc, the London-based owner of the Kay Jewelers and H.Samuel chains. Tiffany didn''t return calls seeking comment.
``Large retailers will have to come to terms with the fact that diamonds are a natural product with inherent supply limitations,'''' Martin Rapaport, chairman of Rapaport Research, a consultant based in Glen Allen, Virginia, said at a conference in New York on Oct. 12. |
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