De Beers Announces Another Price Hike
March 17, 04
Sightholders were informed this week to expect a price hike of 5 percent on average at the coming Sight, without any additional further details. This is the second price hike this year.
In a statement the company says today “DTC will raise its prices of rough diamonds by an average of 5% with most categories rising in line with the average. Assortments will remain consistent and, as usual, box prices may vary according to intakes.”
The price rise is coming on the tails of an increase in demand in the centers and downstream at stores.
De Beers says, “This price increase reflects the underlying supply and demand situation. A strong Christmas season in the Western Markets was coupled with double-digit growth in Asia-Arabia, improvement in Japan and a better than expected H2 in Greater China following SARS in Q2. This growth in demand at retail has continued into 2004. These positive factors have led to re-stocking throughout the pipeline, reflected by strong cutting-centre demand for rough.”
Another reason is the continued weakness of the US dollar, having a “significant impact on decreasing the price of diamonds to consumers in approximately 40 percent of the world whilst increasing the cost of mining”.
Recently De Beers MD Gary Ralfe warned of an impending price rise during the first half of the year.
Several Sightholders have asked De Beers to make public announcements of price increases in order to make it easier for them to inform their clients of expected hikes. This issue has been of special significants for those engaged in programs.
Perhaps not a policy, but De Beers did say today it “appreciates the desirability of its Sightholders being able to write programs for polished sales against the certainty of DTC rough prices. While we are unable to make any commitment, it is DTC’s hope and intention that it will be able to maintain the new price list for a number of sights to facilitate working together towards another good season”.