De Beers Reduces Value of Rough Allocations

De Beers will offer sightholders up to 20% less supply by value for 2024 due to declines in rough prices, market insiders told Rapaport News.

The miner informed customers of their allocations on Friday ahead of the December sight, which takes place this week in Botswana, the sources said Monday on condition of anonymity.

De Beers reviews the allotments every year, basing its decisions on clients’ past buying records as well as expected availability of production. Sightholders tell De Beers how much rough they will require during the coming 12 months, with the miner subsequently informing them how much they will likely receive — known as De Beers’ “intention to offer,” or ITO.

The sources estimated drops in overall allocations ranging from 10% to 20% in value terms compared with 2023. As De Beers expresses the amounts in dollars, the changes reflect this year’s fall in rough prices as well as likely decreases next year, they explained.

“As prices are projected to go down, ITOs generally have fallen,” said one source. “De Beers will say that they ITOed conservatively.”

The miner has kept aside more goods in “ex-plan,” meaning they will be available for customers to buy outside their preset allocations, the person added.

The cuts focus on the international sight — rough that customers can manufacture anywhere in the world, most commonly in India — while goods earmarked for polishing in Botswana and Namibia have seen less of a reduction, sources added.

“We did indeed engage with sightholders on Friday regarding 2024 ITOs,” a De Beers spokesperson said. He declined to comment on the details.

De Beers has no shortage of diamonds after it allowed sightholders to refuse all goods at the final two trading sessions of the year without this impacting their future allocations. It plans to stockpile the unsold merchandise “because we are confident that over time the diamond price will increase and we will be able to sell that supply into the growing demand that we believe will come,” Bloomberg quoted De Beers CEO Al Cook as saying last month.

The miner maintained 100% flexibility at the December sight, which began Monday and ends Friday in Gaborone, the Botswana capital, customers said. Prices are unchanged, as has been the case since the last decrease in July, the sources added. Sales will be similar to last month’s $80 million — the weakest since 2020 — or perhaps lower, they added.

Demand has slumped due to slow US and Chinese consumer sales, competition from lab-grown diamonds, and subsequent attempts by the midstream to reduce inventories. The Indian industry began a two-month voluntary freeze on rough imports on October 15 in an effort to ease the market crisis.