Martin Rapaport Says De Beers 'Heading The Right Way'

Finance and Trade
29/01/2016 17:07

After sharply criticizing De Beers' policy just a couple of months ago, Martin  Rapaport writes that De Beers is now "moving forward in the right direction by reducing rough prices sufficiently to enable increased sales of rough diamonds and a resumption of diamond manufacturing activity." As evidence, he points to the rise in De Beers rough diamond sales to $540 million in the first sight of this year from $248 million in the final sight of 2015.

"While there is no official indication as to how much De Beers lowered rough prices, we estimate a drop of 7 to 10% in the current sales cycle following a decline of 15% in 2015. The reduction in De Beers' rough prices includes the nominal lowering of price (i.e. reducing prices for specific boxes of rough) as well as improvements in the assortments within the boxes. By providing better assortments, De Beers can lower prices without reducing nominal prices. We encourage De Beers to maintain a consistent level of rough diamond supply at price levels that ensure reasonable sustainable profitability to diamond manufacturers. In the event that De Beers continues on a responsible path, we expect a healthy diamond market to emerge," he wrote adding that "we are headed in the right direction and it looks like the worst may be over."