(IDEX Online News) – The diamond industry is showing encouraging signs of recovery, but it is in a delicate position and may be subject to some volatility, according to De Beers Group chief executive Phillippe Mellier.

Speaking to Sightholders at De Beers’ first Sight of the year, Mellier acknowledged that 2015 had been a challenging year, for individual businesses and the industry as a whole. He said that the difficulties were different from those presented in the global economic downturn of 2008, and that it had been necessary to absorb the unfavorable trading conditions in the short-term, to protect the industry’s long-term viability.

Striking a positive note Mellier said, “We have seen polished diamond prices start to stabilize and even increase in certain areas, we have seen some encouraging early indications from holiday season sales in the US consumer market and we have seen greater trading activity than at the end of 2015.” He warned, however, that macroeconomic conditions, including the strong dollar could have a negative effect on downstream demand.

He announced that De Beers would focus on supply and demand in 2016. On the supply side, the company will restructure the Global Sightholder Sales business, allowing Sightholders more flexibility on the uptake of goods. De Beers acknowledged that there was reduced demand for rough, and that the forecast for 2016 was unpredictable. Production in the first half of the year will likely be down as a result.

On the demand side, Mellier said that De Beers would continue to support the Diamond Producers Association (DPA) in its attempts to improve consumer confidence and demand in diamonds, while acknowledging the success of De Beers’ marketing over the holiday period.