De Beers prices stable at $650M feb. sight

Avi Krawitz

De Beers kept its prices basically stable as the February sight closed with an estimated value of $650 million.
De Beers surprised us because everyone thought they would raise prices at the sight,” said an Israel-based rough dealer. “Overall, sightholders were happy and the mood was more positive than at previous sights.

An India-based sightholder agreed that the rough market is more upbeat following the sight, as premiums were high before the sight and with little room for profit for manufacturers.

Rough trading on the secondary market was strong before the sight, which prompted expectations for a price increase. In addition, ALROSA adjusted prices on different categories with the average price rising 2.5 percent at its February trading session, an ALROSA spokesperson said.

ALROSA saw positive trends in the rough market during January and February, compared to the last few months on 2013, particularly as there were requests for additional supply of diamonds during the trading sessions,” the spokesperson said. She added that ALROSA’s rough prices have remained flat since November 2013. ALROSA’s next trading session takes place next week on March 11 to 14.

David Johnson, head of midstream communications for De Beers, stressed that De Beers is taking a cautious approach to raising prices to ensure that its prices reflect the true state of the market.

Polished is moving in the right direction and polished inventory has reduced slightly, whereas rough premiums had run ahead of the market [prior to the February sight],” Johnson said. “We’re taking a steady approach to prices.

Polished diamond prices increased in 2014 with the RapNet Diamond Index (RAPI) for 1-carat diamonds rising 1.5 percent during the first two months of the year.

De Beers raised prices by an average 5 percent at its January sight prompted by strong demand as manufacturers increased production after the Diwali break and had reduced their rough purchases toward the end of 2013. Rough demand remained strong despite the price hike although sightholders expressed concern a further increase in February would be unsustainable.

As De Beers prices remained stable in February, an Israel-based rough broker reported that premiums did not increase after the sight and even softened slightly.

Guy Harari, CEO of Bluedax, a rough brokerage, noted that De Beers boxes were trading at low single-digit premiums on average with the strongest boxes yielded premiums of up to 10 percent. He added that there is good demand for rough that yields polished below 1-carat and SI and lower clarity diamonds.

Sightholders are already speculating that De Beers may increase prices in the coming months and have questioned whether there is sufficient liquidity in the market to support an increase, especially after the Hong Kong show, which began on Monday and continues through to March 9.

There are signs that liquidity is getting tighter in India and the foreign banks are reducing their credit to the industry,” an India-based sightholder said. Rough prices are still high but if the Hong Kong show is positive, I expect De beers will raise prices in March.

Source Rapaport