DTC's August sight estimated at $540 million

| Friday September 3, 2010 00:00

Sight participants reported that De Beers supplied some ex-plan, the majority of which went to sights in Botswana and South Africa.

Most sight participants that spoke with Rapaport News agreed that premiums were still strong with some boxes trading above 10 percent.

'There is no room for increases at the moment because polished is moving, but not at a pace that would justify a price hike,' said one diamond professional. 'Everyone is waiting for the Hong Kong show.' Despite strong trading at the India International Jewellery Show (IIJS) in Mumbai  this past week, polished prices remained stable for most goods.

One India-based sightholder noted that there remained 'good enthusiasm' to buy rough on the sub-continent, particularly as manufacturers prepare for the upcoming Diwali festival, a popular time to buy jewelry in India, which will begin this year on November 5.

'This was the last sight that you can buy rough to polish before Diwali so now is the time to stock up,' he explained. He added that the Zimbabwe rough that came on the market, following the auction of Marange goods, did not have the impact to alleviate shortages and cause a softening of prices, that people thought.

The sightholder noted reports that Russia may start selling its $1 billion stockpile as well as additional rough from Zimbabwe, could present a different scenario later in the year.

'At the moment there is no major threat that will pull the market down so dealers are happy to hold onto their rough,' he said. 'But while the market is in synch at the moment, the Indian banks are being watchful for what may happen four to five months down the line.'While there were little surprises regarding the De Beers August rough supply, sightholders appeared more concerned about the announcement De Beers made at the sight regarding changes to its Diamdel sales mechanism.

Beginning in October, sightholders will be able to participate in Diamdel's online auctions and these will be opened to the wider market in April. DTC also said that Diamdel clients who show strong demand for certain boxes will be able to apply for DTC goods in the middle of the contract period, beginning in the next supplier of choice contract period in 2012.

While most welcomed the opportunity to buy Diamdel's goods, sightholders remained cautious about the impact the move may have on DTC's boxes. 'It's a positive move and we are very excited at the prospect of gaining access to Diamdel's rough,' said one Antwerp-based sightholder. 'There is a fear that it may trigger more price increases as it gives DTC access to more information from the market.'

Another sightholder agreed, noting that just as BHP Billiton's spot tender prices had created a market benchmark, so too the Diamdel prices may affect the DTC goods. 'We are concerned about price distortions and the impact that the auction prices might have on DTC boxes,' he added.  'Also, the fact that Diamdel clients will be given the opportunity to become sightholders in the middle of the contract period is going to put pressure on sightholders to pay high prices for the rough.'

DTC chief executive officer (CEO) Varda Shine told Rapaport News that nothing would change in DTC's pricing policy following the announcement and that the Diamdel auction results would continue to be one of a number of factors considered by the company.