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RAPAPORT... Diamond Trading Company (DTC), the De Beers sales unit, had one of its quietest sights in years this week, as many sightholders deferred taking goods for December. Market sources estimated the sight's value at between $80 million and $120 million, about a fifth of the size of the December 2007 sight. Prices remained relatively stable, and there was little change in the assortment of goods.
“It’s a very difficult environment for everyone, both sightholders and De Beers,” said one industry insider. “There’s simply no demand at the moment.”
DTC spokesperson Louise Prior stressed that the company’s sales reflected the level of demand from its sightholders. Reports indicated that many sightholders deferred taking goods for which they had applied until the January sight, and that others simply didn’t apply for goods this month. De Beers had previously warned that it expected the November and December sights to be smaller, given the current exceptional global economic challenges and the prevailing level of demand. Prior explained that in the current environment, it was the company’s policy to offer “fair value for money in the box mixtures within the context of our pricing structure.”
DTC has not made a major pricing adjustment since raising prices at its July sight, when it raised them by an average of 5 percent and up to 15 percent on larger goods. At that time, the company reported that average prices had increased by 16 percent in 2008. While one sightholder noted a slight decrease, of 2 to 4 percent, in the prices of smaller goods at the December sight, he and most market professionals surveyed by Rapaport News said they do not expect a significant downward price adjustment from DTC until a full assessment of the Christmas season can be made, unlikely until at least February.
In contrast, smaller diamond mining companies that sell their goods on tender have noted significant declines in tender prices for rough diamonds in the past few months. Gem Diamonds, for example, reported that average prices from its large-diamond-bearing Letseng mine have fallen 15 percent so far in the fourth quarter compared with prices in the first half of the year. A string of companies, including Kopane Diamonds, DiamondEx, KimCor, Mwana Africa, BRC DiamondCore and Petra Diamonds, announced they were cutting back on output or suspending operations to cope with falling prices achieved on tender and lower demand for their goods.
De Beers has also said it will cut production to level its supply with demand. The company has extended the application deadline for its next sight to January 4, to allow sightholders to judge their supply requirements in light of the performance of the market over Christmas.
The sight, which is scheduled for the week of January 19 to 23, is again expected to be relatively small. Prior said that DTC will continue its pricing and assortment policy “to the extent that the current circumstances prevail.”
For the 10 sights held this year, Rapaport estimates that the value of DTC's sights fell 9 percent to about $5.5 billion. De Beers is expected to release its 2008 operations and earnings review in February, at which time it will update the price adjustments it made during the year.
| DTC London Sight Results 2008 | | Month | Date | Sight Estimation | | January | 14-18 | $590 MIL | | February | 18-22 | $600 MIL | | March | 25-28 | $550 MIL | | April | 28-2 (May) | $660 MIL | | June | 2-6 | $700 MIL | | July | 7-11 | $720 MIL | | August | 18-22 | $725 MIL | | September | 22-26 | $600 MIL | | November | 3-7 | $300 MIL | | December | 8-12 | $100 MIL | |
| | | DTC London Sight Results 2007 | | Month | Sight Estimation | | January | $600 MIL | | February | $680 MIL | | March | $600 MIL | | April | $580 MIL | | May | $630 MIL | | June | $650 MIL | | July | $650 MIL | | September | $650 MIL | | October | $530 MIL | | December | $500 MIL | |
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