First diamond sight successful-DTCB

Brian Benza
Staff Writer | Friday January 29, 2010 00:00

 

Speaking to BusinessWeek, DTCB Communications and Public Affairs Manager Kago Mmopi said, compared to last year, this year's first sight saw a significant increase in the amount of sales.

' The sight was held last week and although company policy does not allow me to divulge figures, it was very successful with all 16 sightholders participating.

'There has been gradual improvement in the rough diamond market since the 2nd quarter of last year, although at reduced demand levels compared to 2008,' said Mmopi.

The participation by all sightholders is a total contrast to the situation at the beginning of last year when virtually no diamond were sold as sightholders were either illiquid or playing the wait and see game.Although no figures could be obtained from DTC Botswana, RapaportNews a leading player in the diamond industry this week reported that it estimates the Diamond Trading Company's (DTC) first sight of 2010, which includes DTC's sightholders from across the world, to be around $550 million, with both the company and sightholders noting a very active rough diamond market in January.

The estimated value included nonstandard goods that were not part of the submitted intentions to offer (ITOs) supplied to select sightholders.

'The mood was very upbeat and when you compare this month versus January 2009, the change is really quite remarkable,' DTC spokesperson Louise Prior was quoted by Rapaport. 'People are pleased to see the back of 2009 and are looking forward to 2010.'

Market observers saw strong demand for rough diamond due to shortages in the market, which allowed DTC to raise prices, on average, by low-single-digit percentages. The hike appeared to be well received by sightholders, who said that they also foresaw higher increases before the sight and expect another price bump at the February sight.

'It appears that DTC has adopted the strategy to raise prices slightly at each sight, rather than by larger increments more sporadically, making it easier for the market to absorb,' said one diamond industry professional.

These trends offer evidence of a buoyant rough market that is spurring mining companies to significantly boost their supplies to the market in the first quarter.

With an estimated value of $550 million, the January DTC sight was the company's largest in over a year. DTC's sales fell 47 percent to $3.14 billion in 2009, according to RDR estimates. In response to the lower demand, De Beers cut its production by more than 50 percent during the year. Spokesperson Prior reported that while De Beers output will ramp up this year, it will not reach the highs of 2008. 'We will be focusing on profitable production,' she stressed.

Prior also reported that the sight week will be cut to four days beginning with the April sight. De Beers is scheduled to publish its full-year results for 2009 on February 19.