De Beers sightholders refused about half of their allocated supply last week, reducing the estimated value of rough sold at the sight to $200 million.
The move extends a trend of refusals from previous months, turning the mood at the event somber even as the mining company kept prices stable. Rough trading on the secondary market was “extremely quiet” following the sight and boxes sold at a discount to De Beers list prices after additional costs such as value-added services and broker fees, according to Guy Harari, chief executive officer of Bluedax, an online rough trading brokerage.
“The mood is the worst I’ve seen over the past few sights,” Harari said. “It’s no longer just a question of price; there are no buyers for polished and only demand for a few items.”
At the previous sight in August, De Beers allowed sightholders to defer up to 75 percent of allocated supply whilst cutting prices by 8 percent to 10 percent. The company also allowed sightholders to re-phase their in-plan allocations for the six sights from October to the end of the current contract year in March.
“De Beers reduced prices in August but it wasn’t enough because polished prices continue to fall,” said a Mumbai-based sightholder. “There are enough polished goods for the season and even if there aren’t, let the retailers look for the goods. There’s no point in buying [rough] when you can’t make a profit.”
Lack of polished demand
Sightholders were unsurprised as De Beers kept prices stable in October even though they struggled to garner a profit from its supply of rough diamonds.
“The main concern in the market is no longer prices. It is a lack of buyers for the polished that’s worrying,” said an Antwerp-based sightholder. He would rather see rough prices remain stable until the end of the year as another bout of cuts may result in a further drop in polished prices.
Polished prices dived in September, with the RapNet Diamond Index (RAPI™) for 1-carat GIA-graded diamonds sliding 3 percent for the month and 6.3 percent in the third quarter.