Sales of rough diamonds in the first six months of 1993 were a record dollars 2.54bn, according to the Central Selling Organisation, the 60-year-old cartel that in effect controls 80 per cent of the world's supply, setting prices and production quotas.
But the CSO, which is owned by De Beers, the South African diamond company, warned that the 42 per cent jump in sales was due to one-off circumstances. Growth is expected to tail off during the rest of the year.
Demand for rough diamonds from De Beers' dollars 4bn stockpile had been given a fillip in the first six months of the year by a shortage of production in war-torn Angola and Zaire. Producers in both countries had been dumping stones on the Antwerp market.
A resumption of fighting and wet weather, which had led to flooding of mining areas, had allowed the CSO to step into the market to fill the gap.
There had also been a shortage of polished stones from Russia and buoyant demand from India and the US, where the world's biggest gem market had picked up. Other cutting centres had begun restocking.
De Beers warned that, although demand for rough diamonds remained firm, the encouraging supply trends during the first half of the year had been transitory.
Both Angola and Zaire had increased the number of diamonds coming on to the market. The US government had sold dollars 77m worth of its strategic stockpile and was expected to make further sales.
Russia, which has threatened to renege on a deal to sell 95 per cent of its output to the CSO, is starting to sell polished stones again. Russia has said it wants to sell up to 20 per cent of its production on the open market.
The latest figures from De Beers are the best since the company started keeping records of sales in 1902. They were 42 per cent higher than in the first half of 1992 and 56 per cent better than in the second half.
De Beers underlined the extent to which the market had stabilised by backpedalling for the second time this year on quota reductions it had imposed on its suppliers last summer.
Last year, to cope with the twin problems of oversupply and recession-hit demand, De Beers had said it would buy only 75 per cent of previously agreed amounts. Yesterday it raised that to 85 per cent, following a rise to 80 per cent in March.
In February De Beers was able to introduce and maintain a 1.5 per cent price rise for larger diamonds, although the improvement in market confidence came too late to prevent the company cutting its dividend for only the third time this century after a 29 per cent fall in pre-tax earnings.
(Photograph omitted)Reuse content