Sightholders at De Beers’ February sales cycle reported a reduced supply of rough diamonds over five carats, citing production declines and De Beers’ inventory management strategy.
Prices remained stable across most categories as the company continued its approach of regulating supply.
Market observers noted that this shortage contrasts with De Beers’ reported inventory levels, estimated at around $2 billion—its highest since 2008. However, much of this stock is believed to consist of smaller-sized goods rather than the larger diamonds currently in short supply.
Production Declines and Supply Management
De Beers’ total rough diamond production fell by 22% in 2024 to 24.7 million carats. The company has projected further reductions for 2025, estimating output between 20 million and 23 million carats in response to market demand.
The Jwaneng mine in Botswana, a significant source of higher-value rough diamonds, saw production decline by 49% in 2024, yielding 1 million carats. This decrease is expected to affect the availability of 5- to 10-carat rough stones.
Some in the trade believe the shortage may not be solely due to production cuts but could also reflect De Beers’ supply strategy. The company has historically adjusted supply levels to manage market conditions, and some sightholders speculate that larger stones are being allocated selectively.
One sightholder executive stated that applications for “ex-plan” goods—stones available outside standard allocations—had been unsuccessful, reinforcing the perception of restricted supply. “I suspect that they use the large stones as leverage and give them only to sightholders that buy smaller goods from them,” he said.
Market Sentiment and Pricing Trends
Despite reports of shortages, De Beers did not adjust its pricing at the February sight. Some sightholders noted an improvement in sentiment, with demand for polished diamonds showing signs of stabilisation and rough supply becoming more limited.
The February sight coincided with the finalisation of a new 10-year sales agreement between De Beers and the Botswana government, concluding a lengthy negotiation process. De Beers marked the occasion with a presentation for sightholders and an event in Gaborone.
Industry-wide developments have also influenced the market. Anglo American, De Beers’ parent company, recently reduced De Beers’ book value by $2.9 billion, reflecting broader challenges in the diamond sector.
While De Beers implemented price reductions in December to align with tender market levels, no significant changes have been made since. Russia’s Alrosa also maintained prices at its February sales event, while other suppliers have reported price increases at recent tenders.
One sightholder commented on the impact of supply constraints: “Especially since De Beers [has been] not reducing the prices, the rough market, it seems, has tightened. It’s not easy to get goods now in the quantity you require. People are bidding up the prices because they need a rough.”
Implications for the Jewelry Industry
For jewellers, the reduced availability of larger rough diamonds may affect the supply of high-value polished stones, particularly in the 2-carat and larger category, which has been more resilient in recent market conditions. This could lead to firmer pricing in certain polished segments, influencing sourcing strategies for manufacturers and retailers.
As De Beers continues its controlled approach to supply, market conditions in the coming months will determine whether shortages persist and how pricing trends develop.
