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De Beers Testing Fixed-Price Forward Contracts
Jan 19, 2017 10:44 AM
By Rapaport News
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RAPAPORT... De Beers will start piloting fixed-price forward contracts for
its auctions business next month to offer more certainty over prices of rough
diamonds.
The contracts will offer a guaranteed supply of rough
diamonds at a predetermined price. Until now, such contracts have only offered
a ‘floating’ price based on the spot price at the point the contract matures.
The new system will especially help small to medium-sized clients avoid that price
uncertainty.
“Our customers have told us they see value in securing
short-term supply contracts but would prefer to do so on a fixed-price basis,
avoiding potential challenges when securing contracts on a floating-price basis
that references the underlying spot price at contract maturity,” said Neil
Ventura, De Beers executive vice-president of auction sales.
The first trial will begin on February 16, covering
grainers, small and near-gem categories of rough diamonds.
De Beers had introduced forward contracts based on a
floating price in December 2013. Since then, the miner has sold 350 bespoke
supply contracts over the three years.
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Tags:
Auctions, De Beers, De Beers auction sales, forward contracts, Neil Ventura, Rapaport News
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