Amidst subdued consumer demand and elevated midstream inventories, diamond giant De Beers has reportedly extended a rare concession to its sightholders, enabling them to postpone up to 50% of their rough diamond purchases to the beginning of next year, according to insider sources as communicated to Rapaport News on Wednesday.
Market insiders disclosed that De Beers corresponded with its clientele on Friday, outlining the opportunity to defer acquisition of specific portions of their allotments of 1-carat and larger rough diamonds for the remainder of 2023. The anonymity of the sources was preserved. The deferral option is differentiated by value, offering a 25% allowance for certain categories and 50% for others. This provision is applicable to sights 8 to 10, scheduled for September, October, and December.
However, this deferment rule does not encompass the August sight, which is currently underway in Botswana.
Under typical circumstances, De Beers restricts sightholders from deferring more than one batch of rough diamonds per category in a six-month span. A failure to make purchases during these sights can impact future access to goods during intention-to-offer (ITO) periods, the yearlong sessions during which allocations are planned.
What sets this recent concession apart is that it allows buyers to shift their purchasing commitments to a new ITO. The precise cutoff date for this deferral window, scheduled for early 2024, was not explicitly outlined by De Beers in its communication.
However, sources revealed that De Beers has stipulated a condition: buyers must acquire a minimum of 65% of non-deferred goods. Failure to meet this requirement would result in the deferred stones being counted as refusals.
This strategic maneuver by De Beers comes in response to sustained sluggish retail sales in the United States and China. The market has observed manufacturers grappling with substantial inventories of less marketable polished diamonds, particularly within the 0.30- to 2.99-carat size range, originating from rough diamonds exceeding 0.75 carats.
According to a source, this move by De Beers is an acknowledgment of the existing polished diamond accumulation, which is deemed sufficient to cater to holiday demand. The new arrangement alleviates the pressure on sightholders, allowing De Beers to retain the rough diamonds rather than necessitating sightholders to purchase and store them independently.
