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Firestone says diamond prices are down 15-20% in six weeks

Miner blames the uncertainty in international financial markets for a drop in demand for smaller diamonds

Diamond prices have fallen by up to 20% since the beginning of August, amid ongoing uncertainty in financial markets.

Diamond miner Firestone Diamonds told the City that the gems had given up almost half of the price rises seen in the first half of 2011, when prices rose 40% driven by demand from China and India.

The miner said it expected “stability” to return to the market later this year. It withdrew 20,000 carats of mainly smaller diamonds from sale recently because they did reach their reserve prices.

“The results of the diamond sale reflect a drop in overall rough diamond prices of approximately 15 to 20% since the beginning of August 2011 and significant volatility in prices in selected categories of diamonds,” Firestone said. “This has been primarily driven by recent uncertainty in international financial markets.

“Rough diamond prices increased approximately 40% in the first half of 2011 driven by significant growth in demand from China and India. With continued growth expected in demand from China and India and insufficient new production to address the current shortfall in supply, the prospects for rough diamond prices remain positive.”

CEO Tim Wilkes added: “Although demand for smaller diamonds has decreased, it has remained firm for larger, better quality diamonds, and we are confident that we will see increased demand for our full range of production later in 2011.” © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds