London: Gains in rough diamond prices may slow in 2010 after surging in the second half of last year as producers increase output of the gems, according to Petra Diamonds Ltd. Chief Executive Officer Johan Dippenaar.

“We are cautiously optimistic that prices will remain firm,” Dippenaar said today in an interview. “We don’t expect big increases. They should be fairly steady.”rices surged last year from a global slump as producers cut output and gem dealers rebuilt stockpiles for Christmas. Prices jumped 48 percent during the first 11 months of 2009, according to data from WWW International Diamond Consultants Ltd. Petra today forecast fiscal full-year production of 1.2 million carats, up from 1.09 million carats a year earlier.

“The rate of rise is going to slow considerably,” Brock Salier, an analyst at Ambrian Partners Ltd., said in London. Gains in 2010 will likely be less than 20 percent, he said. iffany & Co, the second-largest luxury jewelry retailer, said holiday sales gained 17 percent in 2009. Debswana Diamond Co., source of about a fifth of diamond production, will boost output 17 percent this year as long as demand is sustained.

Rising demand for diamonds in China, which overtook Japan as the second-largest market for the gems, and a reduced reliance on the U.S. as the biggest consumer, will help the industry recover, according to Dippenaar. t’s a “much healthier picture if you are not that dependent on one country,” he said. Petra posted net income of $37.9 million in the fiscal first half ended Dec. 31, after a loss of $88 million a year earlier, the company said in an e-mailed statement today.

Petra rose 1 pence, or 1.7 percent, to 59.5 pence by 9:55 a.m. in London trading, valuing the company at 210 million pounds ($325 million). The stock has doubled in the past year.

Credit is given  to Bloomberg by DiamondTopics.com