In 1992 unmistakeable symptoms of malaise emerged. Rough diamond sales plunged 13 per cent to the lowest in five years. Recession paralysed demand, while illicit Angolan and Russian diamonds flooded the market. De Beers was forced to cut its purchases from producers by 25 per cent, and the chairman promised a final dividend cut.
But the group is fighting hard to bolster its image and depleted share price. To boost confidence De Beers yesterday raised rough diamond prices by 1.5 per cent, the first increase for three years.
The London-based CSO said the change reflected increased demand for certain categories of rough diamonds, particularly those bigger than three- quarters of a carat - 4mm to 4.5mm, or roughly the size of an orange pip.
If you are planning to buy a diamond on the retail market, this does not mean you must rush before the increase takes effect on Monday. The price rise is the smallest for many years and a largely cosmetic signal to diamond and stock markets that De Beers is still in charge.
But the effect is rather the opposite. The illicit diamond supply problems have receded, but 1993 looks like another weak year for demand and another difficult year for De Beers. The cartel is not yet in danger of collapse. But 1992 has illustrated that as long as 20 per cent of the world diamond market is not under the group's control its grip can loosen.