De Beers February sight estimated at $550M

Avi Krawitz

The most recent De Beers sight closed with an estimated value of $550 million as the company adjusted assortments to reflect higher values in its boxes.
Sightholders noted that while De Beers kept its prices basically stable at the sight, which ended on February 28, the readjustments in the boxes effectively translated to a price increase of around 4 percent.

Overall, the boxes are looking better and I think the sight was well received,” said one sightholder. “De Beers changed the assortments and so prices increased a bit but I don’t feel it was unreasonable.

Rough prices increased in February with anecdotal reports suggesting BHP Billiton’s spot tender prices also rose around an average 4 percent. Similarly, premiums on De Beers boxes have improved and are selling at around 5 percent on the secondary market. Prices for very large rough, above 15 carat sizes, have increased by more than 12 percent.

Dealers reported that premiums vary according to the type of goods being traded with cheaper goods garnering up to 8 percent, while more expensive rough that is suitable for  high-end polished is trading at lower premiums.

One India-based sightholder expressed concern about the recent rough price increases given the relative stability in polished prices.

There’s an irrational exuberance in the market today,” he said. “I don’t see the logic in why people are paying so much for the rough.”

Many sightholders who spoke with Rapaport News reported that there are pockets of decent polished demand with dossier certified goods below 1-carat, VS-SI and triple EX goods selling well. Rapaport’s RapNet Diamond Index (RAPI) for 1-carat certified polished diamonds rose 0.2 percent in February.

One manufacturer noted that despite the widening gap between rough and polished, there is still some margin in the De Beers goods.

De Beers recently reported that its prices fell 12 percent in 2012, while production and supply fell. The company stated that it continues to experience shortfalls in supply compared with the initial applications for goods made one year ago.

Rough sales through the first two sights of 2013 have declined 22 percent year on year to $1.1 billion, according to Rapaport estimates.

Source Rapaport