BHP Prices Sink +20%, Sight Prices Edge Up

(IDEX Online News) – List prices at the Diamond Trading Company (DTC) Sight this week edged up some 1 to 3 percent, an initial analysis of the boxes show that most of the increases reflect improved assortments. At BHP Billiton's tender, a bellwether indicator of industry demand, prices plummeted by 20 percent and many lots went unsold.

Anxious Sightholders arrived in London on Monday to find that as some expected, the assortment of many boxes were improved. However, contrary to their expectations, the DTC did not leave prices unchanged, which would have constituted a de facto price decrease. Instead, prices were mostly higher by a few points, ranging from one to 10 percent. The debate is rather this is a real price increase or a reflection of the better assortments.

An initial analysis of the boxes show that assortments were improved in a number of popular boxes such as the Round Makeables 4-8 grainers, where the percentage of the larger goods was higher.

Where assortments were less favorable, prices decreased by up too 2 points. Such a box is the low cost Mixed Rejections, down by about 1.5 percent.

Demand in the secondary market for DTC goods is currently very limited and boxes are expected to be sold with a very narrow markup or even below list prices. The sole willingness to let go of the goods at a loss is a need for cash.

According to Sight participant, Sightholders are not in a good mood and claim they will lose at least 15-20 percent on the goods.

Sightholders requested large amounts of extra supply (ex-plan) and received it. This resulted in what is one of the largest August Sights ever, more than $800 million according to early estimates. However, measured in carats, this is one of the smallest August Sights, according to one source.

What will most likely harm trading on the secondary market is the outcome of the BHP Billiton tender, where prices fell by 16 to 23 percent or about 20 percent on average.

In addition to a tough market, the decline may also reflect somewhat lower quality goods.

The selling price of the 2.5-6 carat Sawable White Low goods dropped 23 percent to $3,014 p/c, and the winning bid of the +2.5 carat Rejection reflects an 18.7 percent fall.

IDEX Online will publish its rough market analysis with a report on premiums and demand as well market reactions in the coming days.