Global Diamond Supply Hits Historic Low in 2024

Surat : For the first time since 1980’s, the supply of rough diamonds from the mining companies is estimated to be about 105 million carats in 2024, marking a new low-watermark for contemporary diamond production. Due to this, the inflation of rough and finished diamonds in the market will decrease and gradually the market will come out of recession.

US-based diamond analyst Paul Zimnisky has stated that the net new goods sent downstream (i.e. goods actually sold into the market by the miners), the “supply” figures this year are ever thinner – implying supply to market of less than 100 million carats this year. The last time supply was less than 100 million carats was 1989 according to Paul Zimnisky data.

Supply is only one side of the equation, but materially cutting goods to market is clearly the right path for the industry at the moment. These proactive and aggressive measures should translate to significantly reduced industry-wide stocks as we head into 2025, which ideally will allow profitability, and importantly confidence, to return to the trade all else equal, observed Zimnisky.

In late-October, De Beers’ parent Anglo American released Q3 2024 production and sales results which showed diamond output and sales of 5.6 million carats and 2.1 million carats, respectively – both were the lowest per-quarter figures for De Beers since Q2 2020 (in the midst of the global Covid-19 lockdowns).

The results fall in line with the company’s production guidance which has been cut two times thus far in 2024 in response to market conditions, i.e. in July full-year guidance was cut to 23-26 million carats from a previous 26-29 million carats in April (which was itself previously cut from 29-32 million carats).

While the level of De Beers’ annual output is already on pace to be the lowest since it began reporting the data in 2013, in recent days, Anglo management implied even further potential cuts noting that it is “actively assessing options with (joint venture) partners to reduce production going forward.”

The estimated output of 105 million carats marks a new low-watermark for contemporary diamond production, i.e. below 110 million carats in 2020. For comparison, a high-watermark of 153 million carats was reached in 2018, boosted by the commencement of full-scale production at the Gahcho Kué, Renard and Liqhobong mines.

It’s worth noting the above 2024 forecast accounts for about 32 million carats of output from Russia’s ALROSA, which would only be down 4% year-over-year and down 8% versus 2022. While the company has not publicly released production and sales figures since the imposition of Western sanctions in early-2022, management has alluded that it continues to operate “at full capacity” despite the sanctions and market downturn.