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DTC July Sight Estimate at $420M‎

De Beers Reduces Prices 3%

Jul 19, 2012 8:14 AM   By Avi Krawitz
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RAPAPORT... The Diamond Trading Company's (DTC) July sight had an estimated value of $420 million before ‎deferments or ex-plan, as De Beers reduced prices slightly. At press time, DTC sightholders were expected to ‎reject goods to be offered, which would reduce the value of the sight. ‎

While DTC reduced prices by approximately 3 percent, affecting most categories of goods, ‎sightholders continued to complain that the goods offer no profitability. “Three percent ‎doesn’t really matter when you’re losing up to 20 percent on your boxes,” said one ‎sightholder. ‎

Another sight participant noted that there is very little trading of DTC boxes as sightholders ‎are not prepared to lose money given that they are selling at double-digit discounts on the ‎secondary market.‎

Sightholders have started to reject DTC allocations due as De Beers kept its prices steady while ‎the market weakened. DTC subsequently notified sightholders in June that they could defer ‎up to 50 percent of their July sight target to any other sight in the current intention to offer ‎‎(ITO) period that ends in March ‎‎2013.‎

In addition, DTC has offered sightholders the opportunity to take additional goods, or ex-plan, ‎at the sight. “Some will take the extra goods because it helps build their position for later in the ‎contract period,” said one rough market observer.‎

Rough prices have softened on the secondary market and at tenders of other mining ‎companies in the past two months, raising concerns among sightholders that DTC prices are ‎well above market prices. Harry Winston, which owns 40 percent of the Diavik mine in Canada, ‎reported this week that prices have dropped by an estimated 8 percent since April.  ‎

De Beers is scheduled to report its financial results for the first half of 2012 on Friday. Rapaport ‎estimates that DTC sales fell 19 percent to approximately $2.83 billion during the period.‎
Tags: Avi Krawitz, De Beers, Diamond Trading Company, diamonds, DTC, Rapaport
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