De Beers reduced rough diamond prices 10%–15% at its most recent sight, according to a report in Bloomberg and market sources.
The “historically large reduction” represents De Beers’ first major price cut this year, Bloomberg said, noting that the diamond giant has generally “offered its customers more flexibility and the right to refuse goods rather than lowering prices.”
Market analyst Paul Zimnisky says he understands why De Beers took this action, given that parent company Anglo American has put it up for sale. But he doesn’t understand the timing.
“The polished market was just starting to show signs of stabilizing, and sentiment was healing,” Zimnisky tells JCK. “However, I am afraid this will have a negative knock-on effect on the polished market, and manufacturer margins will just revert back to where they were. The industry was doing a good job of supporting fundamentals on the supply side of the equation, but now it feels like some of that work has been squandered.”
Another industry insider, who wished to remain anonymous, called the decrease a “sign of desperation” and “irresponsible,” as it “lowers the value of everyone’s inventory” right before the all-important holiday season.
This source says that while natural diamond prices have fallen since the COVID-19 pandemic, they have not dropped as dramatically as lab-grown diamond prices have. De Beers’ price cut, he says, erodes one of natural diamonds’ main selling points—that they retain their value better than lab-growns.
Sources also tell JCK that De Beers intends to enforce the rule from its 2021 contract that sightholders must buy at least $15 million worth of goods a year. If they fail to make that threshold in 2024, they can still call themselves sightholders in 2025 but De Beers won’t abide by their “intentions to offer” (ITOs), which guarantee supply, and the sightholders will only be allowed to buy goods ad hoc.
De Beers spokesperson David Johnson says the company doesn’t comment on price reductions or the ITO process, but he tells JCK that the market has seen “some stabilization in polished diamond prices and declines in polished diamond stocks at retail and in the midstream recently, [and that] represents a platform for greater equilibrium and growth as polishing operations prepare to reopen following the extended Diwali break.”
Johnson adds, “Engagements with sightholders about 2025 ITOs will take place in the coming weeks, given that Sight 10 is ongoing and our internal processes are still not final.”
De Beers’ new sightholder contracts will take effect in 2026. (The current contracts were originally supposed to run out at the end of 2023, but that deadline has been extended twice.) At a diamond conference in Antwerp last week, De Beers CEO Al Cook said, “We would like to have fewer sightholders that we have deeper relationships with.”
(Photo courtesy of De Beers)
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