Pop quiz: Rough diamond prices were reduced at Sight 7 by: 13%, 9% or 5%? If you examine the price list, you’ll see that the price of some goods decreased by as little as 2.5%, whereas others were cut by as much as 20%. One report may have been based on a simple average of the discounts and came close to 9%. However, this does not take into account the change in assortments.
The consensus among Sightholders seems to be that assortments were lower, if not much lower this Sight. De Beers has decreased its mining activities, and even though it is probably sitting on a larger than usual inventory, it still may have a shortage of certain goods. It is possible that the lower assortments are the outcome of less availability.
If the assortments were lower, then the lower list price may reflect a combination of price decreases and lower values. In this case, prices are not down 20% or even 13%, and probably not 9%. A large rough diamond dealer estimated the real price reduction at 8%. Another insider stated that the value of the goods was down by as much as 5%, and the real price reduction was around 4%. Thus, it seems that the real price reduction was in the region of 7%-8%.
Thus, it seems that the real price reduction was in the region of 7%-8%
The size of the price reduction is a real economic issue. Many Sightholders are still saying that prices are not low enough to be worthwhile to polish, especially in light of the current trend: a preference on the part of manufacturers to buy polished diamonds instead of manufacturing rough. The reason is that it costs less to buy polished on the market than to buy rough and then polish it.
In the graph below are the price changes of three popular boxes: Fine 2.4-4 carats, Commercial 2.5-4 carats and Spotted Sawables 4-8 grainers. As you can see, their list price somewhat changed over the past year, and most of the price reductions – more than half in all three instances – were made at the most recent Sight. The list price of these three items declined by 12%, 17% and 24%, respectively in the past two years.
