De Beers has reduced prices for smaller rough diamonds at this week’s sight, with manufacturers saying the adjustments aren’t enough to ease their profitability challenges.
The miner cut the price of 3-grainer (0.75-carat) and smaller goods by 4% to 6%, market insiders told Rapaport News Tuesday. In 4- to 6-grainers (1 to 1.5 carats), the price decline was around 4%, they estimated.
Prices of 5- to 10-carat rough increased slightly, though this partly reflected modifications to the assortments, they added. Like-for-like price movements are hard to estimate because changes to the product mix can skew them, the sources cautioned.
De Beers declined to comment.
Thin margins
The miner’s prices of 3-grainers and smaller rough have remained relatively high in recent months. The polished diamonds they produce survived better than the rest of the market during last year’s industry-wide downturn. As a result, De Beers had left prices for this category mostly untouched for a while.
However, the gap between De Beers’ prices and those on the outside market has since widened, prompting the company to make this partial correction, the sources explained.
“Had they not reduced prices, there would have been some refusals,” a sightholder said on condition of anonymity. “This will help them maintain sales volume.”
While polished prices have fallen heavily since February 2022, De Beers maintained its conservative approach to rough prices, avoiding any major changes in the second half of last year despite the market slump. It made sharp reductions to prices of many categories in January, but the high prices of small, melee-producing rough relative to auctions and tenders have dented sightholders’ margins, dealers noted.
“These boxes have been quite expensive for a while, especially the 2-grainers and down,” said one of the sources, noting that the items were now “less loss-making than at the last sight.”
Weak polished
The May sight, De Beers’ fourth trading session of 2024, comes amid sluggish retail demand in the US and China. While polished sales appeared to be recovering in the first quarter, the market was seasonally slow in April and, by some accounts, has been weaker than usual for the time of year.
The biggest improvement this year has been in SI-clarity diamonds, which were among the worst-hit last year due to competition from lab-grown diamonds. However, VS- and higher-clarity goods have suffered, with the RapNet Diamond Index (RAPI™) for 1-carat goods — reflecting round, D to H, IF to VS2 diamonds — falling 3.9% between January 1 and May 1.
Companies that bought De Beers goods at the February sight are finding that the final polished — which takes around six to eight weeks to be ready — is selling at a loss or break-even prices, a sightholder with knowledge of the situation pointed out.
“The polished market is still very depressed,” said another.
The sight, which runs from Monday to Friday, also followed speculation around the future of De Beers, with reports that parent company Anglo American might sell the business. BHP also offered $38.9 billion to acquire Anglo, a bid the company rejected.
Image: Rough diamonds in a sight box. (De Beers)
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