Steady and consistent consumer demand for polished diamonds in the U.S. and Far East is driving a need for rough diamonds. A small Diamond Trading Company (DTC) Sight and high prices in Russia have resulted in a feeling that there is a shortage of goods. This is true in certain areas, mostly in rough resulting in mid-priced 1-1.5 carat polished.

 

The rough shortage, felt mostly in India, was partially, but not only, created by speculative buying. In the past few weeks sales to retailers have started to pick up, driving manufacturers to meet the renewed demand.

 

DTC

The DTC’s Sight 8 totaled $310 million, not just a small Sight but also one that offered very few ex-plan sales. Some traders felt that De Beers offered a smaller Sight on purpose, aiming to drive demand and cause a rise in prices. Sight 8, just before Diwali, is often smaller as Indian manufacturers are away on holiday. It is possible De Beers mined less believing that demand would be low.

 

Prices were unchanged and box compositions were reported to be good.

 

Box trading was limited. DTC boxes containing 2.5-4 carat goods were in demand, Crystal boxes in this size were particularly sought after.

 

Another area of demand was 4-8 gr Crystal and color goods.

 

Demand for Indian goods was healthy. Premiums ranged from 3 percent for the High Makeables -7 +5, to +20 percent for High/Low Common Rejection boxes.

 

Demand for Chips 4-8 gr fell compared to the previous Sight.

 

Reports of 30 and even 50 percent premiums were quickly denied by traders and brokers alike.

 

Alrosa

Alrosa continued selling goods in the market, aiming to maintain a $200 million per month sales level. According to the company, it planned on selling $190 million-$200 million worth of rough diamonds in September.

 

Those sales, to its long-term contacted clients, came on top of $676 million worth of rough diamonds sold to the Russian precious metals and gemstones repository Gokhran, one of the largest Alrosa has made to Gokhran.

 

Despite this activity, Russian prices are clearly too high. This is underscored by the dismal outcome of Gokhran’s auction of +10.8 carat goods.

 

Only about a third of the offered goods, 3,386 carats of the 10,448 carats offered at the auction, were sold, fetching $12.773 million. The result represents an average value of $3,772.30 per carat.

 

The first auction of 2009, held in March, was the Gokhran's smallest ever. Of the 738 rough diamonds weighing 12,136 carats offered at the auction, only 2,160 carats were sold for a total of $4.56 million, an average of $2,111 per carat.

 

Belgium

Belgium’s international rough diamond trade totaled $1.37 billion in September, as the market was seeing growing activity. Net exports stood at $127.54 million for 2.2 million carats of gem and industrial grade rough diamonds.

 

Rough diamond exports of 9.98 million carats carried a value of $749.34 million. Imports of 7.78 million carat were stated to be worth $621.80 million.

 

Outlook

With the holiday season just a month away, demand for rough is expected to slow down, especially for smaller goods. This is not to say that areas of special demand won’t be manufactured. In Surat, where India’s diamond manufacturing is centered, polishers already said they plan to have a short Diwali vacation and work to meet late incoming orders.

 

Traders may take a "wait and see" approach to gauge consumer demand in November before deciding on buying more rough.

 

Demand for key DTC boxes during and after Sight 8: