China’s appetite for diamonds has waned amid the country’s slowing economy and volatile stock market.
“We see that people are postponing their non-essential purchases and avoid buying overly conspicuous goods,” Jean-Marc Leiberherr, managing director of Rio Tinto ’s diamond division, told the Wall Street Journal in an interview.
Although China is still the world’s second-largest diamond market after the United States, double-digit annual percentage growth in diamond sales seen in the country between 2010 and 2014 is likely a thing of the past, Leiberherr said.
Similar dim views of the diamond market have been expressed by other industry powerhouses such as De Beers, owned by Anglo American PLC, and Russia’s Alrosa.
Both companies said diamond prices fell 6 to 8 percent in the first half this year.
Lieberherr estimated global demand will contract by 5 to 7 percent in 2015.
Amid the anemic demand, Chinese retailers such as Chow Tai Fook Jewellery Group Ltd. (01929.HK), the world’s biggest jewelry chain, are stuck with large inventories that could take 12 months or more to clear, Leiberherr said.
“What the Chinese market is experiencing now is a clog in the supply chain,” he said.
Still, Rio Tinto remains optimistic about the industry’s longer-term outlook. The company expects the sector to grow by 8 to 9 percent a year for the decade beginning in 2017, mostly driven by Chinese demand.
– Contact us at [email protected]