De Beers Prices Stable, ALROSA Hiked Rough Prices by 2.5% - Rapaport

De Beers kept its prices basically stable as the February sight closed with an estimated value of $650 million, according to Rapaport cited by Finmarket.ru. According to estimates by Idex Online, De Beers sold rough diamond worth $730 million at the recent sight.
David Johnson, head of midstream communications for De Beers, stressed that De Beers is taking a cautious approach to raising prices to ensure that its prices reflect the true state of the market.
“Polished is moving in the right direction and polished inventory has reduced slightly, whereas rough premiums had run ahead of the market [prior to the February sight],” Johnson said. “We’re taking a steady approach to prices.”
De Beers raised prices by an average 5 percent at its January sight prompted by strong demand as manufacturers increased production after the Diwali break and had reduced their rough purchases toward the end of 2013. Rough demand remained strong despite the price hike although sightholders expressed concern a further increase in February would be unsustainable.
Expectations of growing prices at February sight were resulting from positive dynamics at the secondary market on the threshold of February sale. Some De Beers’ boxes were sold with premiums exceeding 10%, with vast demand for diamonds yielding up to1ct polished goods observed.
According to Rapaport ALROSA adjusted prices on different categories with the average price rising 2.5 percent at its February trading session, an ALROSA spokesperson said.
“ALROSA saw positive trends in the rough market during January and February, compared to the last few months on 2013, particularly as there were requests for additional supply of diamonds during the trading sessions,” the spokesperson said. She added that ALROSA’s rough prices have remained flat since November 2013. ALROSA’s next trading session takes place next week on March 11 to 14.
Polished diamond prices increased in 2014 with the RapNet Diamond Index (RAPI) for 1-carat diamonds rising 1.5 percent during the first two months of the year.
Sightholders are already speculating that De Beers may increase prices in the coming months and have questioned whether there is sufficient liquidity in the market to support an increase, especially after the Hong Kong show, which began on Monday and continues through to March 9.
“There are signs that liquidity is getting tighter in India and the foreign banks are reducing their credit to the industry,” an India-based sightholder said. Rough prices are still high but if the Hong Kong show is positive, I expect De beers will raise prices in March.