De Beers Raises Prices Yet Again

RAPAPORT… De Beers has lifted rough-diamond prices for the fifth time in eight months as the market continues to surge.

This week’s sale saw average increases of 4% to 5%, insiders told Rapaport News on Monday, the first day of the July sight. Rough weighing around 1 carat and larger saw rises of 5% or more, while smaller goods grew in price by approximately 3%, the sources said. De Beers declined to comment.

The miner “feels that overall stock levels are low and that prices are going up in polished,” a sightholder commented on condition of anonymity. “De Beers are very happy, because they know they will sell it in a second.”

Prices are now well above pre-pandemic levels, the sources pointed out. During the peak of the Covid-19 crisis in the second quarter of 2020, De Beers refused to cut prices so as to avoid flooding the market with unsellable goods. It eventually offered deep discounts in August, when demand picked up, and then reversed those with price increases in December, January, February and June, especially in larger categories.

Rough-market activity is buoyant, reflecting solid US and China retail sales and a shortage of mining production. The industry faces a lengthy period in which supply will not meet demand, as rough inventories are low at miners and in the midstream, Alrosa said last week.

“There’s an opportunity for [De Beers] to get the margin and cash in,” another source added. “I think [the price relationship between rough and polished] supports it probably, but [only] just about.”

Questions remain about whether the momentum in the market is sustainable. Prices at rough tenders have also jumped as buyers seek to fill inventory gaps, while sightholders are able to resell De Beers’ goods on the secondary market for significant premiums, market participants said.

“The rough market is taking jumps that are not justifiable,” the anonymous sightholder said. “Goods are being sold just because they are there.”

De Beers has put in place its standard buyback policy at the sight, allowing customers to sell up to 10% of goods by carat weight back to the miner at an agreed price. Still, insiders expect De Beers’ clients to snap up all the diamonds on offer this week.

The sight, the sixth of the year, runs through Friday. De Beers is due to release results of the sale in the coming weeks.

Image: Rough diamonds. (De Beers)