De Beers February Sight Estimated at $550M

De Beers sortingGaborone: De Beers February sight closed with an estimated value of $550 million and rough diamond prices declined an estimated 2 percent to 3 percent, on average. Minor improvements in assortment qualities were also reported. Sightholders said deferrals were lower than they had been in January, but still remained relatively high, reports Rapaport.

Notably, De Beers continued to allow sightholders to defer up to 25 percent of their requested goods without penalty through March, the last sight of the current contract period. Sightholders noted that there was a small amount of ex-plan goods made available during the sight.

“I think we have already touched bottom in the rough market after the hiccup that took place in the prices for polished and the tight liquidity that has affected the industry for the past six months,” said a sightholder from Belgium. “People have understood the reality and restructured their businesses in such a way that they can continue to work with the reality in the market.”

Still, market sentiment among sightholders and rough brokers improved compared with the sight in January, as the ongoing correction in box prices has substantially reduced sightholders losses. An Israeli sightholder noted that trading in the secondary market for De Beers boxes picked up substantially, with most De Beers boxes trading at around cost. Average credit terms reached 90 days for most boxes, with many diamantaires noting that liquidity in the market is still tight.

David Johnson, head of midstream communications for De Beers, said that the recovery in the rough market was expected to be a gradual process that depends on a number of factors, including liquidity among manufacturers, declining polished stocks in the midstream and relative stability in polished prices.

“It won’t be one thing or one sight that will suddenly throw everything back into gear,” said Johnson. “We are already seeing the rough market coming back into better balance as retail polished demand works its way through to the rough market and polished prices have started to stabilize in some of the weaker performing categories until now.”

Some sightholders said they believe that the diamond market is approaching a point of stability, although many diamantaires expect De Beers box prices will continue to decline until the end of the first quarter.

“I think rough producers got the message that they cannot increase prices any further and that they need provide some oxygen to the [midstream] business,” said the Belgian sightholder. He added that he expected this will lead polished prices to stabilize in the coming months as manufacturers and dealers stopped selling at a loss or at cost to improve their liquidity.