Prices dropped at Petra Diamonds’ most recent tender as weak Chinese demand contributed to a market slowdown.
The miner sold $61.3 million worth of rough in October and November, almost triple the total for the equivalent tender in 2021 but 40% lower than September’s $102.9 million, it reported Thursday. Rough valuations were 5.1% lower than in September on a like-for-like basis and rose 13% year on year.
“This is a creditable result in the current somewhat muted market,” said CEO Richard Duffy. “Demand for fancy-colored and large white stones continued to be evident despite this being a seasonally weaker period.”
“Subdued” demand in China due to Covid-19 containment measures continued to impact pricing for 0.75- to 5-carat rough, with some price pressure also evident in the 5- to 10-carat range, the executive added. Values of smaller goods were largely flat compared with the previous tender.
Sales volume more than tripled year on year to 447,276 carats and was 14% lower than at the last tender. The average price dropped 15% compared to a year ago and fell 31% from September, coming to $137 per carat. The decline relative to the previous tender reflected the lower like-for-like pricing as well as a decrease in the availability of high-value stones from the Cullinan mine, which boosted revenues in September.
The company delayed the end of the tender due to the market conditions. This extension succeeded in lifting prices by around 6.4% for the affected parcels, management explained. The next sale is scheduled to close in early December 2022, but the company will continue to be flexible, it added.
“Although we continue to expect a supportive diamond market in the medium to longer term as a result of the structural supply deficit, we see current levels of demand continuing into the New Year, albeit with the potential upside of festive-season sales and any easing of lockdown restrictions in China,” Duffy commented.
Image: Petra Diamonds’ Finsch mine. (Petra Diamonds)