CCTV Transcripts

CCTV Script 11/06/20

— This is the script of CNBC's news report for China's CCTV on June 11, 2020, Thursday.

The impact on the diamond industry during the epidemic can be described as industry-wide.  At the retail level, a large number of jewelry stores have been closed due to the epidemic; In the processing industry, Indian cutting and processing workers are confined to their homes because of quarantine measures.

DE Beers cancelled an auction in March because dealers could not travel. We've seen industry reports that De Beers, the world's largest diamond miner and auctioneer, has sold no rough stones since February virtually, and his main rival, Alrosa PJSC of Russia, is no different. Although the big diamond dealers have taken a number of market protection measures to stabilize prices, such as allowing buyers to change contracts and reduce production. The Rapaport Group expects that the production of rough diamonds will be reduced by 16% in carats this year and by 29% in price to the lowest level since 2009. But issues in distribution channels still bring severe inventory problems. The backlog of inventories at the world's five largest diamond producers may already be worth more than $3.5bn and could reach $4.5bn by the end of the year, according to industry consultancy Gemdax, accounting for about a third of the annual output of rough diamonds. Alrosa said on Friday that its diamond stocks would rise to 30m carats by the end of the year, almost equal to its entire annual production. The company also hopes to reduce inventories by 15m carats over the next three years. Some of the worst-hit mining companies have filed for bankruptcy. Others, such as Firestone of the UK, have delisted.

Faced with an overhang of inventories, smaller miners have sought to survive by slashing their prices. At the Antwerp Diamond Trading Centre in Belgium, miners are offering discounts of up to 25%. The biggest miners, while refusing to cut prices, have taken a number of steps to attract buyers.

DE Beers' auction, scheduled for later this month, will, for example, allow sellers to view goods outside the South African country of Botswana and accept buyers who sign contracts to reject them. But destocking is not that easy. Without a significant improvement in the demand side, upstream destocking of rough diamonds has historically tended to result in an increase in polished diamond stocks, transferring pressure from traders to retailers and not helping to boost prices. How to manage supply has always been a headache issue for diamond dealers. In the early years of the new century DE Beers undertook some destocking. Inventories rose again during the 2008 financial crisis and around 2013. This time, there are fears that the industry could again see weak in prices and demand.

Still, some signs of recovery have emerged. Retail in China has opened up and India has allowed its main diamond polishing centers to restart production, despite capacity constraints. Next on the agenda will be DE Beers' diamond auction, which will be a barometer of market confidence. We will keep an eye on this issue.