De Beers slashes the price of diamonds for the first time in years as industry crisis deepens
- De Beers said it will slash prices by five per cent before sale in Botswana
- Diamond market is currently in crisis due to an overabundance of cheap stones
- Family-run traders in Belgium, Israel and India are surviving on slim returns
The world’s leading diamond company has cut its wholesale prices by five per cent but this is unlikely to lead to slashed costs on retail jewellery.
De Beers, the world’s largest diamond producer, reduced prices by five per cent for its November sale, according to sources close to the matter.
Profits in the industry have plummeted for middlemen customers of De Beers who buy rough stones from the diamond giant.
‘The De Beers rough diamond price cut is likely meant as a way to help restore profitability for its clients, which are primarily diamond manufacturers, i.e. diamond cutters and polishers, in India,’ New York-based diamond market analyst, Paul Zimnisky, told the MailOnline.
‘So this price cut in particular will not necessarily translate to a price reduction for consumers.’
De Beers, the world’s largest diamond producer, has cut prices by five per cent for its November sale
People walk past the US luxury shop Tiffany&Co.’s in Paris on October 29, 2019. De Beer’s subsidiary buyers, including Tiffany & Co., purchase rough stones from the diamond giant but some of these middlemen and companies are struggling to earn a living during the industry crisis
An employee displays a 109 carat uncut diamond worth an estimated value of up to $2 million in this arranged photograph at DTC Botswana, a unit of De Beers, in Gaborone, Botswana, in 2012. Though the middlemen, also known as ‘sightholders’, may be able to earn more money, it’s unlikely that the reduced costs will trickle down to the retail market
Family-run traders in Belgium, Israel and India are surviving on slim returns as are subsidiaries Tiffany & Co and Graff Diamonds.
The current crisis has been blamed on low prices and a flood of diamonds, oversupplying the market. The opening of three new diamond mines in 2016 and 2017 is believed to be the source of the new stones, Zimnisky said.
Despite the lack of trickle down to consumers from this particular price slash from De Beers, Zimnisky added that diamond prices for retail have actually lowered this year.
‘Based on my analysis, polished diamond prices at the retail level are down as much as 9 per cent in 2019,’ he said.
An employee uses a magnifier to inspect a finished pear-shaped diamond before final classification at the Shrenuj Botswana Ltd sightholder office in Gaborone, Botswana, in 2012. De Beers once held a monopoly on diamonds traded across the globe with 80-85 per cent of stones moved. Their current 35 per cent means they are still influential in dictating the market
From its formation in 1888 until the beginning of the 21st Century, De Beers held a monopoly on the world’s diamond supply, controlling 80 to 85 per cent stones moved around the globe.
Though competition has increased, they can still set prices and dictate market costs.
De Beers has refuted claims that the demand for diamonds has softened.
Middlemen, known as ‘sightholders’, buy stones from De Beers, at 10 sales each year in Botswana’s capital of Gaborone.
Buyers have to accept the prices and quantities – at a discounted rate.
Some of the sightholders have said they are struggling to make a living with the shrinking deals.
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