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De Beers Enables 100% Deferrals at March Sight
Mar 26, 2020 6:18 AM
By Joshua Freedman
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RAPAPORT... De Beers is allowing sightholders unlimited deferrals at its upcoming rough-diamond sale as manufacturing closures have obliterated demand, market sources told Rapaport News.
The rare step follows the shutdown of the Surat polishing industry this week due to the coronavirus, leaving buyers with few opportunities to cut or resell the miner’s goods. Sightholders are anticipating rock-bottom sales at the sight, which begins on Monday in Botswana.
“No one is expecting more than 10% or 15% of the goods to be sold,” a sightholder commented. “There’s no real point to keep goods to put into manufacturing a month from now.”
Last week, De Beers said customers had expressed desire for the sight to take place, despite Botswana banning visitors from the US, China, India, Belgium and several other countries. However, the situation is developing fast, with manufacturing having now stopped due to a three-week lockdown in India, and retail markets closing across North America and Europe. International shipments have also become more difficult.
De Beers has responded by allowing sightholders to push back purchases at this sale, its third of the year, to sights 4 and 5, which take place in May and June. While it allowed deferrals of goods destined for China at its February sight, the new concessions apply to all categories. Its rough prices remain unchanged from February, Rapaport News understands.
“These are exceptional times, and I think they’ve taken a leading example in how to approach this,” another source in the rough sector said. “It’s been appreciated by the market. There’s no way you can force people to buy goods at times like this, when everything’s just frozen. The market is changing on a day-by-day basis. There might have been demand last week, because India wasn’t going to shut down yet, but I don’t know how much demand is going to be left now, unless someone is willing to sit on the goods for a few months.”
Sightholders can still theoretically make purchases remotely due to the relatively consistent nature of De Beers’ diamond boxes, even though most are unable to attend. However, the miner could yet cancel the sight, another source said on condition of anonymity.
“Perhaps there will be one client buying one box, but not more,” he predicted.
Separately, De Beers has postponed the application deadline for its new customer agreement from this week to late April due to the practical consequences of the pandemic, sources said. Clients must indicate which supply program they wish to participate in from 2021, with the miner offering different contracts for manufacturers, dealers and retailers.
The company is also planning to move away from its current practice of determining future rough allocations based on past purchases. At present, sightholders agree on a supply program for a one-year contract period and are expected to make those purchases, with limited flexibility. However, industry slowdowns in the past year have forced the miner to introduce unprecedented concessions to avoid flooding the market with unwanted goods.
De Beers declined to comment.
Image: A rough diamond. (Ben Perry/Armoury Films/De Beers)
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Tags:
Botswana, Coronavirus, COVID-19, De Beers, Joshua Freedman, Rapaport News, rough, Rough Diamonds, rough sales, Sightholders, Sights
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