De Beers sold an estimated $750 million worth of rough diamonds at the Diamond Trading Company (DTC) October sight this past week, while maintaining prices relatively stable.
Many sightholders took allocations that were deferred from previous sights, making the October sight the largest De Beers sale so far in 2012. There were relatively low levels of refusal of goods this month.
“The market is still weak in part because a lot of rough has come onto the market this month and demand is down,” said one sight participant. “Sightholders are still not happy as it remains difficult to make money on DTC boxes.”
Sightholders noted that most DTC boxes are trading on the secondary market at list or low, single-digit premiums, while some goods are still being discounted.
Nigel Simson, head of beneficiation at DTC, noted that the mood among sightholders remains cautious but has improved after a few weeks of stability since the Hong Kong show. “After the August sight, people were hoping for some stability and that’s generally what we’ve had,” Simson said. “Overall, the sight went well, although trading conditions are still difficult.”
De Beers reduced prices by about an average 8 percent to 10 percentat the DTC August sight and stressed that it does not intend to make further significant adjustments in the short term. Philippe Mellier, De Beers chief executive officer, added that the company will not be able to meet sightholders’ applications for goods in the short term as production remains below capacitywhile demand has diminished since those applications were made.
As a result, sightholders expect relatively low supply at the remaining two sights of 2012, and in the first quarter of 2013.
During the first 10 months of the year, DTC sales have declined by 17 percent year on year to $4.74 billion, according to Rapaport estimates.