De Beers Orapa mine
The rough-diamond market slowed during last week’s De Beers July sight, with prices on the secondary market decreasing.
De Beers sold $572 million of rough in the sixth sales cycle, an
increase of 6% from the previous sight and 8% from the same period a
year ago, the company said Tuesday. However, rough dealers were
reselling boxes of De Beers goods for no premium, or at a loss, in
contrast to the buoyant activity in the first half of the year,
sightholders said.
While De Beers kept its prices generally steady, prices on the
secondary market were about 4% to 5% lower than they were following the
June sight, dealers reported. “Taking into account the real cost of the
boxes [including tax, broker fees and other costs], the box prices
represented a loss to the sellers,” Dudu Harari of diamond broker
Bluedax said in a report on the sight.
The cooling of the market comes as diamond cutters are finally
realizing that the mismatch between rough and polished prices has made
it difficult for them to make money on goods, one rough broker told
Rapaport News on Tuesday.
Demand for polished diamonds remains weak, resulting in slim profit
margins for manufacturers, sightholders said, as rough prices increased
an estimated 3% in the first half. “This sight, we saw a paradigm
shift,” the rough broker explained.
“There wasn’t much demand for De Beers boxes on the secondary market.
This was a very significant difference from sight five. “The wheels
have come off the bus as far as the rough market is concerned,” the
broker added. “If something doesn’t change at the end of the pipeline,
we could see a drop in rough prices.” De Beers, meanwhile, said demand
for its goods was solid across its product range, as the miner had
reported in previous sights.
“With Diwali being earlier than normal in 2017, we saw some demand
from Indian diamantaires pulled forward from sight seven,” said De Beers
CEO Bruce Cleaver. “This was due to these customers needing to make
rough-diamond purchases in sufficient time to complete their polishing
before the holiday begins.” De Beers continued its recent practice of
not offering any “ex-plan” goods — excess rough that the miner makes
available beyond what it has agreed to supply sightholders — according
to the anonymous broker.
Buyers reported shortages in certain rough categories, in line with earlier sales this year.
Source:diamonds.net
