De Beers Group chief executive, Philippe Mellier, warned of likely “volatility” in the diamond industry in 2016.
Addressing a sightholder reception on Wednesday, Mellier said despite “encouraging signs” in the industry at the start of 2016, the recovery in the diamond sector remained “delicate” and there there is likely to be some volatility throughout the year.
Mellier highlighted some positive developments, including the price of polished diamond prices starting to stabilise and even increase in some areas and greater trading activity than at the end of 2015.
However he went on to state that there is continued uncertainty regarding the macroeconomic outlook, claiming that currency pressures have the potential to weigh on downstream demand in a number of locations.
He added De Beers will have to “wait and see” how retail restocking appetite develops.
Recognising the “crucial” role played by a number of midstream diamond businesses in addressing “recent difficulties”, Mellier said: “2015’s challenges were very different from those presented by the demand crisis that followed the 2008 downturn, but that does not mean they were any less difficult to deal with.
“We all had to take difficult decisions, considering trade-offs between what was right for our businesses and what was right for the industry.
“We all had to absorb the impact of negative trading conditions in the short-term so as to protect the industry’s long-term interests. And we all had to employ our hard-earned experience and expertise to navigate through some very difficult times.”
However, major figures in the diamond trade have criticised De Beers for keeping cut diamond prices too high for the middle market to find any profitability during the squeeze.
Moving forward Mellier stated that De Beers would focus on both supply and demand, along with investing in non-proprietary marketing throughout the year.
The announcement comes amid reports that De Beers is set to cut diamond prices in a bid to boost sales.