Diamond Sales Lost Bit of Their Luster in 1990

A declining world economy and the Persian Gulf crisis combined to give the diamond market a dull finish for 1990, figures released Monday by the De Beers diamond cartel showed.

Sales of rough, uncut diamonds rose 2% to $4.17 billion last year, from $4.09 billion in 1989, De Beers’ marketing arm, the Central Selling Organization, said.

It termed 1990 “a year of consolidation” and said the sales were satisfactory. But when adjusted for inflation, which ran at about a 6% annual rate in the United States and higher in some other leading consumer nations, the sales of diamonds fell.

Sales also dropped 32% in the second half of the year from the robust first half because of the international economic climate and the gulf crisis, the organization said.

“Broadly speaking, we feel that’s pretty good, considering what’s happening,” said Bill Lear, a director of the organization, which is based in London. “But it is clearly a real drop.”

De Beers has extraordinary control over the amount and price of diamonds available worldwide. The organization said it curtailed diamond supplies as a result of the softness in 1990.

Officials for what is formally known as De Beers Consolidated Mines Ltd. said the outlook was uncertain, because of the continuing Middle East turmoil, which has undermined consumer confidence by propelling oil prices, and thus inflation, higher.

The Central Selling Organization markets 80% of the world’s diamond production, which comes to about 100 million carats a year.

In 1989, sales fell 2%, after large gains of 35% in 1988 and 19% in 1987.

The recession in the United States had a big impact in 1990, said Martin Rapaport, who produces the New York-based Rapaport Diamond Report industry newsletter.

The United States, the world’s largest diamond consumer, buys about a third of all polished diamonds set in jewelry, De Beers said.

Uncut Diamond Sales In billions of dollars 1971: $0.62 1990: $4.17 Source: DeBeers Central Selling Organization