De Beers May Sight Estimated At $560 Million

Sightholders reported that prices on some boxes were adjusted slightly; however, on average, prices and assortments were basically unchanged.

The De Beers May sight had an estimated value of $560 million as the rough diamond market remains steady. 

“The market is stable but at high rough price levels, whereby we don’t see profit margins as a manufacturer,” a sightholder told Rapaport News.

“There are certain areas where De Beers’ prices are high, but we don’t have much of an argument for a reduction in prices. Goods are selling and polished demand is there.”

Dealers noted that rough trading on the secondary market has slowed with boxes selling at premiums of around 5 percent with credit terms. Sightholders explained that rough demand declined after De Beers raised prices at the previous March-April sight, signaling the end of a strong first quarter. Rapaport estimates that rough prices have increased by between 7 percent and 10 percent since the beginning of the year.

Mike Aggett, the CEO of H. Goldie & Company, a diamond broker for De Beers sightholders, reported that the mood at the sight was more subdued than in recent months as the industry moves into a traditionally quieter period.

David Johnson, the head of midstream communications for De Beers, agreed that the rough and polished markets have entered a seasonally slower period, but added that the outlook remains positive for the rest of the year.

Sightholders stressed that liquidity has tightened in the past month as rough prices rose, while their ability to sell a high volume of polished goods has been hampered by the backlog for certification at the Gemological Institute of America (GIA). Aggett added that the situation regarding delays at the GIA has added to the financial pressure already being experienced by the manufacturers, “again bringing the question of margins to the fore.”

Another sightholder said, “I don’t see margins as a manufacturer. There are better margins to be made from buying polished rather than rough manufacturing – especially taking into account that extended cycle.”

Still, sightholders reported that there is good demand for rough that can be turned into polished of 0.20-carat to 0.70-carat, while demand was weaker for cheaper rejection goods and smaller sizes.