DTC Sight 4 Marked by an Abundance of Extra Goods

This week’s Diamond Trading Company (DTC) Sight was preceded by an estimate that it would be in the neighborhood of $800 million. Indian Sightholders said they received 30 – 50 percent in ex-plan goods above their ITO (Intention to Offer).

While everybody had a chance to back out of their requests for extra goods (submitted four weeks ahead of the Sight), it appears this hardly happened. Though the Indian Sightholders are returning home overflowing with goods, Israeli and Belgium Sightholders asked for fewer ex-plan goods, minimizing their expenses at a time when DTC boxes are selling at 3 percent below list price.

“Why would someone want so many goods, if they can only sell it at a loss?” a couple of Sightholders asked.

Overall, ex-plan goods were probably 20-25 percent of ITO, assortments were unchanged, and the total value was probably in the range of $700 to $750 million.

What is important is the continued gloomy mood among Sightholders. One said he wants to play it safe (and asked for very little in extra goods), another fears a “tsunami”, and yet another shock his head while expressing concern over stocks and prices.

All spoke with concern about a market out of balance, where bank interest rates are high and the cost of running a business is continually increasing. While some blame the situation on the producers, others recognize that companies such as De Beers are businesses, looking primarily after their own commercial interests.

 “De Beers is honest,” said a Sightholder. “They tell me they want me to buy, and I do.” Another said the DTC has sales targets and is actively purusing them.

When asked about when they expect to see a change, nobody is thinking about the U.S., where diamond jewelry are losing market share to other luxury products. Instead, all eyes are set on China and India. The Beijing Olympics is expected to give a great boost to business in China, while India is simply continuing to grow. This translates into a time frame of over a year until the turnaround happens.

Until than, Sightholders are working on their ITO’s for the second half of the year. The deadline for submission is May 22, and answers are expected during Sight 5 (June 12 – 16), after the DTC runs the requests through their Model – a computerized analysis system that weighs all requests by type and quantity against mine production forecasts.