DTC November sight estimate at $500M

| Monday November 15, 2010 00:00

 

DTC spokesperson Louise Prior confirmed a low single-digit price hike, while others noted an increase of approximately 5 percent on certain boxes which are in higher demand. Those boxes included stars and pointer sizes, coloured goods and the more commercial Indian items. A large quantity of ex-plan  goods that were not included in the intentions to offer (ITO) were supplied at the London sight.

One industry professional noted that most sightholders accepted the price hike as it had followed similar increases by other major mining companies and since DTC boxes have been trading at high premiums in the secondary market. The effect is that DTC goods are now selling at an estimated average premium of about 4 percent.He noted, however, that the increase was difficult news for sightholders as their margins are being squeezed further. 'It's a difficult time at the moment because it's not easy to profit on manufacturing and it's becoming harder for dealers to sell the boxes at these prices,' he added.

Others expressed concern that the rough market was in fact buoyant while polished prices were holding stable.

'The sight reflected a strong demand for rough at the moment,' said one sightholder who operates in India and Antwerp. Another sightholder noted that demand was fuelled by production shortages and that businesses are eager to manufacture but don't have the sufficient supply.

Prior stressed that De Beers does not take a short-term view on market conditions and this would apply to reports of shortages in the market. 'We only take a long-term view on pricing and production,' she explained.

De Beers has expressed that it would not ramp up production to levels experienced in  2007-08 and has maintained a cautious approach to increasing output after cutting levels during the downturn in 2009.

Prior noted that sightholders appeared in positive mood and the company had an over application for goods before the sight. She added that much depends upon the U.S. Christmas buying season, which traditionally starts on the Friday following Thanksgiving Day, which is November 26.

Others agreed and added that Indian manufacturers have been out of the market in the past two weeks for their Diwali festival and are expected to give trading a slight boost when they return next week.

DTC sight sales have increased an estimated 49 percent to approximately $4.4 billion for 2010, according to Rapaport News estimates. The tenth and final sight for the year is scheduled to begin December 13.