IDEX Online Rough Diamond Market Report: Sight 9 - No Demand

The industry witnessed a very rare occurrence in the last two weeks - no demand on the secondary market for rough diamonds. An even rarer occurrence took place when many first hand buyers - those that buy from producers like the Diamond Trading Company (DTC) and Alrosa - turned down a large percentage of the offered goods.

Clearly, cash flow issues stifled secondary market rough diamond purchases this week. This problem climbed up the pipeline and killed the appetite for rough diamonds among Sightholders, as there is no one to sell the excess goods to.

According to a number of reports, several Sightholders left all goods on the table, this is the case for the Sights in London as well as Botswana. The names mentioned in this context are some of the biggest in the industry.

Boxes sold in the secondary market are sold at a loss, getting negative premiums of 3 - 5 percent.

With stockpiles of polished diamonds growing, buying rough means to buy for inventory. In these uncertain times, when no one is sure when the horizon will brighten up, maintaining solvency is clearly the name of the game.

Our initial estimate that $350 million worth of goods were offered at Sight 9 may have been an over estimate. At the lower end it may have been as little as $270 million.

This leaves Sight 10, the last one for 2008, to be a very big unknown.