De Beers will enhance its flexibility for this month’s sight to address the market downturn by limiting supply rather than lowering prices.
The company announced it will allow sightholders to remove certain goods from their rough diamond allocations and request larger buybacks than usual. This decision comes ahead of the July sight, starting next Monday, amid rising inventories and falling polished diamond prices, particularly in India. De Beers’ customers expect the company to maintain rough-price levels to avoid market flooding and further negative impacts on polished prices.
De Beers’ sales policies have been scrutinized during recent crises due to challenges manufacturers face in profiting from rough diamonds. The latest concessions apply to a broad range of sight goods, especially those with tight profitability.
The company’s contract sales system, which rewards sightholders for purchasing their full allocations, has been criticized for pressuring the midstream to accumulate unwanted inventories.
At the upcoming sight, sightholders will be able to refuse up to half of the lots in three boxes of medium- and higher-quality rough diamonds under 3 grainers (0.75 carats), according to a note De Beers sent to sightholders on Friday. Normally, failing to buy would reduce sightholders’ future allocations.
Customers with beneficiation factories in diamond-producing countries, such as Botswana, can remove lots from an additional 21 boxes. A lot is a subcategory of goods within a box.
Additionally, De Beers will allow sightholders to sell up to 30% of certain rough purchases by carat weight back to the miner without affecting future allocations. This buyback concession, typically capped at 10%, will apply to 13 boxes and four categories of unaggregated goods from De Beers’ Namibian operations.
A De Beers spokesperson confirmed it was providing sightholders with supply flexibility to support their requirements in light of prevailing industry conditions. Enhanced flexibility usually accompanies stable prices, allowing customers to keep the most profitable items and leave the rest.
Rough-market insiders expect sales at the sight to be under $200 million, down from $315 million in June 2024 and $411 million in July 2023, as sightholders take advantage of the flexibility. July is traditionally a slower period for rough sales, with the market picking up in August for the holiday season. De Beers will not publish a sales total for this sight, shifting to quarterly reporting.
However, sightholders argue that price reductions are necessary due to the mismatch between rough and polished valuations. The RapNet Diamond Index (RAPI™) for 1-carat polished goods — reflecting round, D to H, IF to VS2 diamonds — fell 3.6% in June and 10.9% in the first half of the year. Declines for 0.30-carat items were even sharper.
“They think flexibility is enough for months to come,” one market insider told Rapaport News. “Many don’t think this is the answer.”
