Market update - Uncertain times

Rough diamonds are selling if their price is correct. The conversation amongst Sightholders this week is that De Beers’ pricing of last week’s sight boxes has been a disappointment. Sightholders refused around 25% of their allocated boxes.

Alrosa – although prices of the Russian goods were on the high side according to buyers, Alrosa has shown consideration to the market condition and allowed a considerable percentage of rejections and have given some discounts to a few customers viewed as being loyal.

Tenders - participation in the different tenders declined this week. Some tenders showed better results than others. Prices at the last tender of Okavango Diamond Corporation (ODC - Botswana governmental diamond corp) were lower than their previous tender. Participation was apparently on the low side and the prices achieved were relatively lower than in previous tenders.

Open market – rough diamonds prices in the open market are rather on the weak side. Having said that, rough diamond traders report sales in most sizes and qualities when priced realistically.

10 Carats (yielding 4 carats and larger in terms of polished diamonds) are still going strong especially speculative stones.

Demand for 5 to 10 carats (yielding mainly 1 to 3 carats in terms of polished diamonds) is weak in better qualities due to a decline of prices in 2 and 3 carats polished yielded from those sizes, but speculative goods which need high expertise and extensive preplanning and preparation are in demand.

2.5 to 4 carats (yielding mainly 0.75 to 1 carat in terms of polished diamonds) are weak due to a decline in the prices of 1 carats polished. It seems that diamantaires’ inventories are more than full with 1ct polished stones.

2 Carats (yielding mainly 0.50 to 0.75 carat in terms of polished diamonds) are in good demand especially in spotted range.

1, 1.25 and 1.50 carats rough (yielding mainly 0.20 to 0.30 carats and up to 0.50 carat in terms of polished diamonds) are in demand.

Melees and ¾ (yielding mainly 0.07 to 0.25 carats in terms of polished diamonds) are in demand.

Smalls (yielding 0.005 to 0.03 carats in terms of polished diamonds) are weak except for -6 industry sieve which are selling very strong at the moment.

Cleavage – complicated stones that need preparing and priced under $100 per carat are in demand.

Manufacturers are lowering polished prices to generate both sales and a cash flow. Polished diamond prices are declining in most areas. Manufacturers are hoping for good sales in the holiday season to create a cash flow that will allow them to pay the goods that they bought on credit and the same time generate a cash flow and profits which will allow them to buy rough in the first quarter of 2015.

The results of the recent Sotheby’s and Christie’s auctions are a reflection of the uncertainty of the market. The prices achieved are either very high or did not get the minimum reserve price.

The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified advisor.