De Beers testing fixed-price forward contracts


De Beers will start piloting fixed-price forward contracts for its auctions business next month to offer more certainty over prices of rough diamonds.The contracts will offer a guaranteed supply of rough diamonds at a predetermined price. Until now, such contracts have only offered a ‘floating’ price based on the spot price at the point the contract matures. The new system will especially help small to medium-sized clients avoid that price uncertainty.

Our customers have told us they see value in securing short-term supply contracts but would prefer to do so on a fixed-price basis, avoiding potential challenges when securing contracts on a floating-price basis that references the underlying spot price at contract maturity,” said Neil Ventura, De Beers executive vice-president of auction sales.

The first trial will begin on February 16, covering grainers, small and near-gem categories of rough diamonds.

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Source Rapaport