De Beers
De Beers said today it is cutting back on diamond production after seeing a significant drop in demand.
The world's largest producer of diamonds said today it is reducing the amount of unpolished stones that it will auction off in November and December. This follows pressure from the industry to tighten output to avoid prices slumping.
During the boom years diamond prices rose strongly, and are actually still up 16% this year despite the crisis. But it appears that the love affair between the rich and their glittering jewellery may have cooled.
Gem Diamonds, the FTSE 250 firm, reported last week that prices at a recent auction were 16% lower. And according to diamond expert Martin Rapaport, sales of big gems had almost dried up.
"Plummeting stock and the severe credit crunch is reducing luxury demand," Rapaport warned.
With sales in the US slipping, there is also evidence of lower demand in India. The Diwali festival, later this month, is usually a key time for diamond sales, but this year sales are much lower.
This is all extremely bad news for those at the bottom of the diamond trade. In India, there are reports of hundreds of small diamond polishers being forced to down tools altogether.
