Full BHP Billiton October 2011 Spot prices included with this report.

 

The Diamond Trading Company Sight last week was small, as November Sights tend to be, the smallest Sight of the year so far. The DTC has lowered prices de facto, even though it has not done so officially. It did this by improving assortments, mainly improving the size distribution within the boxes.

 

A look at the DTC price list shows that the prices of many boxes have declined by 1-3 percent, with some dropping by as much as 5.5 percent. However, a further analysis of the content of the boxes shows the size distribution improved by a few percentage points, which was all that was needed for a real price improvement of 5-10 percent.

 

This is a much needed reprieve for many traders, especially after the prices of polished have declined since August. Despite this, Sightholders say that DTC prices are still too high and that the improvement was not enough.

 

Trading has restarted on the secondary market, although, it is still slow. One diamantaire told IDEX Online that, "there is more business but still not enough to help strengthen the market."

 

With the improved demand, traders are willing to pay more for the goods from the last Sight, however, all boxes are still trading at below DTC list prices. The Indian goods are selling for as low as 10 percent below DTC list price, according to one trader.

 

At the BHP spot market, the October results show a certain improvement in prices compared to September, especially among the 4-8 grainers (for example 4-8gr Z White Low +12.7 percent to $915 p/c). However, even after the recent drop in prices, the goods are some 20 percent higher compared to October 2010.

 

The Spot prices are some 30 percent lower than their peak in July of this year. The full October Spot market results are below, including changes compared to Spot prices in October 2010 (year-over-year), September 2011 (month-over-month) and to July 2011, when prices peaked.

 

What is fueling the improved prices are mainly the Indian manufacturers who decided to return to work as soon as the Diwali holiday was over, thereby getting the factories in Surat busy as early as possible. Traders are expecting orders in January and February to replenish retailers' stocks, keeping in mind that they have not made large purchases since July.

 

Another factor is a desire by some to control the average value of their stock, by bringing in lower cost goods before the expensive goods are sold – leading to a slower decline in the value of the stock.

 

Outlook

Prices will likely gradually improve, but moderate polished prices are expected to prevent runaway business.

 

Demand for DTC key Boxes after Sight 9

 

BHP Billiton October Spot Prices* 

Oct-11 % Change Jul-11 % Chg. from Oct-10   Item Price p/c from Sep 2011 Price p/c Jul-11 Price p/c YoY % 2.5-6ct Z White HIGH $3,686.00 0.9% $4,858.88 -24.1% $3,226.61 14.2% 2.5-6ct Z White LOW $2,825.51 4.2% $3,915.00 -27.8% $2,361.00 19.7% 2.5-6ct MB White HIGH $3,159.27 -4.6% $4,377.57 -27.8% $2,879.08 9.7% 2.5-6ct MB White LOW $2,702.00 0.1% $3,751.00 -28.0% $2,156.00 25.3% 2.5-6ct FA White $1,688.37 0.0% $2,281.31 -26.0% $1,440.18 17.2% 2.5-6ct CLV White $1,451.81 -4.4% $1,875.00 -22.6% $1,200.00 21.0%               2.5-10ct ZMC CTD $1,088.00 0.6% $1,375.99 -20.9% $828.28 31.4% 2.5-10ct ZMC BRN $1,055.81 -15.9% $1,618.18 -34.8% $1,315.00 -19.7% 2.5-10ct CL/LO White $530.08 -5.0% $764.21 -30.6% $515.00 2.9% 2.5-10ct CLV/LO BRN $225.00 -4.6% $318.18 -29.3% $333.89 -32.6% +2.5ct Rejections $81.18 (Unsold in Sept.) $121.18 -33.0% $84.18 -3.6%               4-8gr Z White HIGH $1,204.44 10.7% $1,606.33 -25.0% $1,035.03 16.4% 4-8gr Z White LOW $915.00 12.7% $1,227.81 -25.5% $730.89 25.2% 4-8gr MB White HIGH $1,051.51 8.9% $1,350.00 -22.1% $865.27 21.5% 4-8gr MB White LOW $801.11 9.9% $1,037.25 -22.8% $637.61 25.6% 4-8gr FA White $500.00 (Unsold in Sept.) $690.00 -27.5% $535.03 -6.5% 4-8gr CLV White $468.27 9.9% $617.33 -24.1% $393.89 18.9% 4-8gr ZMC BRN $358.18 10.5% $425.18 -15.8% $382.22 -6.3% 4-8gr CL/LO White $205.81 (Unsold in Sept.) $272.48 -24.5% $191.89 7.3% 4-8gr CL/LO Brown $68.81 (Unsold in Sept.) $90.89 -24.3% 84 -18.1%               +9-3gr Z White $335.54 6.9% $411.38 -18.4% $283.61 18.3% +9-3gr MB White $266.00 10.0% $335.33 -20.7% $218.49 21.7% +9-3gr CLV White $155.96 14.4% $186.25 -16.3% $123.88 25.9% +9-3gr ZMC BRN $47.00 17.2% $61.35 -23.4% $36.18 29.9%               +9-8gr ZMC CTD $189.03 (Unsold in Sept.) $271.33 -30.3% $152.03 24.3% +9-8gr Rejections $35.35 27.9% $45.45 -22.2% $23.53 50.2%               -9 ROM $115.00 11.6% $145.00 -20.7% $68.00 69.1% *All BHP Billiton price data collected from third parties