De Beers recorded one of its smallest ever contract sales in November as last week’s sight closed with an estimated value of $70 million. The rough diamond supplier kept prices stable and enabled extra flexibility due to the slump in sightholder demand.
“It was a small sight as we expected because of the Diwali holidays,” said David Johnson, head of midstream communications for De Beers. “We recognize that there are challenges in the industry and that we’re still in a destocking period. So our focus was to be flexible to meet sightholder needs.”
Among the measures taken, sightholders could defer their entire November allocations to December, or bring their December supply forward. They could also reject 20 percent of their box instead of the usual 10 percent so–called “buybacks.” In addition, sightholders could apply for goods that were not in their initial intensions to offer (ITOs), a mechanism referred to as “ITO swaps.”
Most took the deferral option and many didn’t attend the sight which one Israeli sightholder referred to as a non-event. An Antwerp-based Indian manufacturer noted that businesses were already closing for Diwali so there was no real point in spending three-to-four days in Gaborone.
He reported that many Surat-based factories were closing for the full month rather than the usual three week Diwali break due to the drop in market activity. However, the sightholder said he expects rough demand to improve in December once factories have resumed operations.
Different in December?
“Manufacturers stopped buying because they knew their factories were closing so they were polishing whatever old stock they had,” the sightholder explained. “Now, there’s some concern that manufacturers don’t have rough stock and will need to buy just to restart production.”
Consequently, the December sight is expected to be larger, particularly since sightholders deferred most of their November allocations to next month. Johnson explained that while applications for December will be filed in the coming week, the company will revert to its standard deferral policy next month – allowing the deferral of one box per band (selection of boxes) from one sight to the next every six months. De Beers will maintain the option to do ITO swaps in December.