RBC Capital Markets: Diamond Industry Picking Up, but Still Fragile
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14.06.09, 14:15
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World
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RBC Capital Markets said this week that although the rough diamond industry had bottomed out, it still remains "fragile".
According to RBC analyst Des Kilalea, “while diamond prices overreacted on the downside from 2008’s euphoric levels, it is likely the recent recovery has gone further than justified.
“This uncertainty and still-depressed consumer markets lead us to maintain a cautious investment stance to the listed diamond companies.”
He added that a shortage of certain commercial categories has driven out demand for rough diamonds. He explains that this has had been created by De Beers and Russian producer Alrosa who starved the market of new goods.
Kilalea said that the fact that De Beers had recently begun mining operations in Botswana mines while Alrosa was looking to start selling rough diamonds again was causing concern, because retail sales of diamond jewelry in the major US market remained under pressure.
According to Kilelea, China offers a more optimistic picture, but this is not enough to pull the industry out of recession.
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By: Avida Landau
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