De Beers is expanding its flexibility for this month’s sight as the miner responds to the market downturn by limiting supply rather than lowering prices.
The company informed clients last week that sightholders could remove certain goods from their allocations of rough diamonds and request larger buybacks than usual.
The July sight, beginning next Monday, occurs amid rising inventories and falling prices in the polished diamond sector, particularly in India.
De Beers’ customers expect the company to maintain rough-price levels to avoid flooding the market and further depressing polished prices.
In recent crises, De Beers’ sales policies have been scrutinized due to the challenges manufacturers face in making profits from rough diamonds. The latest concessions apply to a wide range of sight goods, focusing on items with especially tight profitability margins.
De Beers’ contract sales system, which rewards sightholders who buy their full allocations, has faced criticism for pressuring the midstream to accumulate unwanted inventories. At the upcoming trading session, sightholders will be able to refuse up to half of the lots in three boxes of medium- and higher-quality rough diamonds under 3 grainers (0.75 carats), according to a note De Beers sent on Friday. Normally, refusal would result in reduced future allocations.
Customers with beneficiation factories — cutting units in diamond-producing countries like Botswana — can remove lots from an additional 21 boxes, the note said. A lot is a subcategory of goods within a box.
Additionally, De Beers will allow sightholders to sell up to 30% of certain rough purchases by carat weight back to the miner without affecting future allocations. This buyback concession, usually capped at 10%, will apply to 13 boxes as well as four categories of unaggregated goods from the miner’s Namibian operations.
A De Beers spokesperson declined to comment on the details but confirmed it was “providing sightholders with some elements of supply flexibility to support their requirements.”
The adjustments were made “in light of the prevailing industry conditions,” the note to sightholders stated.
Enhanced flexibility typically accompanies stable prices, as De Beers uses these mechanisms to limit sightholders’ losses without lowering prices. Customers can choose to keep the most profitable items and leave the rest.
Rough-market insiders expect sales at this sight to be under $200 million — down from $315 million in June 2024 and $411 million in July 2023 — as sightholders take advantage of the increased flexibility.
July is traditionally a slower period for rough sales, with the market picking up in August as the industry prepares for the holiday season. De Beers will not publish a sales total for this sight, shifting to quarterly reporting.
However, sightholders argue that price reductions are necessary given the mismatch between rough and polished valuations.
The RapNet Diamond Index (RAPI™) for 1-carat polished goods — reflecting round, D to H, IF to VS2 diamonds — fell 3.6% in June and slumped 10.9% in the first half of the year. The declines for 0.30-carat items were even sharper.
“They think flexibility is enough for months to come,” one market insider told Rapaport News. “Many don’t think this is the answer.”
