De Beers said to cut diamond prices in first sale of the year

[LONDON] De Beers cut diamond prices again in its first sale of the year as the world's biggest producer seeks to counter a slowdown in demand, according to three people familiar with the process.

The Anglo American Plc unit reduced prices by as much as 7 per cent, said the people, who asked not to be identified as the information isn't public. De Beers plans to offer about US$450 million of diamonds for sale, one of the people said. A spokesman for the company declined to comment.

Slower diamond jewelry sales in China, the biggest buyer after the US, and a credit crunch in the industry has sapped demand. That's led to a buildup of diamonds held by cutters and traders, and forced the biggest producers to cut output and lower prices. Prices for the gems sank 18 per cent last year, according to data from UK-based WWW International Diamond Consultants.

De Beers cut its production target three times last year in an effort to support prices, aiming to mine 29 million carats in 2015 after it initially sought to produce as many as 34 million carats. This year, the company plans to mine between 26 million carats and 28 million carats.

While rough diamond prices may decline a further 5 percent this year, they could stabilize as soon as the second quarter as polished diamond prices rise and shortages for certain products materialize, Panmure Gordon & Co said last week. RBC Capital Markets said Monday they were "cautious" about rough prices in 2016.

BLOOMBERG