Premiums Are Back for Large De Beers Diamonds 

Shortages of larger De Beers goods are driving premiums of around 5% on the secondary market after a long period in which sightholders were unable to resell for a profit, insiders told Rapaport News. 

Companies that bought 5- to 10-carat goods at this week’s sight, which began on Monday, received bids from manufacturers ranging from 3% to 7% over the De Beers list price, market sources said Tuesday. 

The “select makeable” category in that size — which produces 1.5- to 3-carat polished with an average color of I and an average clarity of SI — attracted premiums at the higher end of that range. It’s unclear whether sightholders agreed to sell at that price.  

De Beers customers that buy boxes of rough diamonds at sights can resell them, but weak demand has limited their ability to generate margins from this during the industry downturn. These margins are called premiums and refer to the price at which they trade the merchandise relative to the miner’s list price. 

Recent production declines in India have led to shortages of polished as well as a modest improvement in rough demand as factories look to fill orders from the US and the Indian domestic market. 

“There’s a shortage of goods — you have less stock in India and less production,” said a sight broker who received an offer of 7% above the list price for 5- to 10-carat “select” goods on behalf of a client. (The deal never went through.) “People are starting to [buy] more and more goods.” 

The broker estimates premiums of 3% to 4% for “commercial” 5- to 10-caraters. These goods tend to have a higher yield than select makeables in size terms, and also typically yield SI goods, but more of the resulting polished has black inclusions than with select makeables. 

Shortfalls in bigger rough sizes were already visible at the previous sight in February. Market sources were unsure if this reflected production cuts, De Beers’ attempts to withhold supply, better demand for 2-carat and larger polished, or a mixture of all three. 

 “There’s no ‘select’ right now on the market,” said a second market source. “Everybody is talking about it because, for a long time, there weren’t any premiums. But we’re talking about very few boxes.” 

Auction relaunch 

De Beers is also resuming its auction sales after a one-year pause. The company will hold an auction during the current sales cycle in Gaborone, having moved the business from Singapore to the Botswana capital. It announced this shift last April, when it also suspended the unit’s operations and sales until the transition was complete. 

Unlike in the past, the first relaunched auction will be only for sightholders, a De Beers spokesperson said Tuesday. The company has renamed the business De Beers Auctions Botswana, and it will be part of the miner’s global diamond-trading business, which has been based in the southern African country since 2013. 

At least for the first sale, the format will change from an auction with open bids to a tender with closed bids, meaning participants will not know the prices others are offering, sources told Rapaport News. Goods at this event will focus on larger stones rather than the usual full range, sources said.  

The spokesperson did not confirm these two points but said tender-style sales with closed bids were “not a new approach,” as the company had held these in 2023 through its “offer channel” format. 

“As we look to reestablish regular sales events for auctions, we will initially run a small-scale event in cycle 3 for sightholder customers with a relatively small amount of product enabling the testing of the platform,” the spokesperson said. “We will subsequently look to develop a longer-term plan for future events, including the timeline and commercial approach.” 

The suspension and later resumption of auctions reflect the market downturn and the current slight improvement, according to a third source. 

“While we are encouraged by recent signs of improvements in the rough-diamond trading sector, we will continue to adopt a prudent and watchful approach to supply,” De Beers added. 

Prices and flexibility terms at the sight were stable, dealers said. The session ends on Friday. Sources said it was too early to estimate the sales value, but they expected a slight improvement in demand compared with the first two sales of the year, as the market had picked up and sightholders had deferred purchases from the January and February sights.

Image: Rough diamonds on display at De Beers’ offices in Calgary, Canada. (Ben Perry/Armoury Films/De Beers)