Emma Muller
25 June 2004
Johannesburg — FOR the first time De Beers will sell its rough diamonds based only on intake during the second half-year, the company said yesterday.
De Beers, which only a few years ago held $5bn worth of diamond stock, is facing severe shortages under its demanddriven supplier-of-choice policy, and is now selling newly mined stones.
"It is an interesting test delivering the goods in an intake environment," said Varda Shine, sales director at De Beers' Diamond Trading Company (DTC).
She said there would be no ex-plan in the second half. Ex-plan are goods sold outside the company's intention to offer which is a term used by DTC to describe a planned supply of rough to individual clients on a six-monthly basis.
Despite requests from sightholders to guarantee a portion of their supplies in order to meet the demands of retail programmes they have entered into under supplier of choice, the DTC said it could not guarantee such a delivery.
"Guaranteeing only (a) few clients is undermining supplier-of-choice and therefore if we guarantee everyone then it turns out to be another version of intention to offer," Shine said.
Currently the bulk of the DTC sales are done through intentions to offer.
Whereas the DTC's price policy was based mainly on consumer demand in the first half, its main focus in the second half would be on the movement in polished prices, the company said.
De Beers shortages should hasten the consolidation of the diamond industry, as it became more retail oriented.
"I do not think De Beers will be able to meet the demand in the next two to three years," said one leading international diamond company, and DTC client. "There will be (fewer) sightholders and the companies that remain will remain healthy if they get the right prices from retailers and no longer have to finance them."
Some sightholders have suggested retailers that have shown strong price resistance to polished in the first half were starting to accept a level of price increase. "At Vegas (JCK jewellery trade show in Las Vegas earlier this month) for the first time they are willing to pay more or faster to get the goods," said one Israeli-based manufacturer.
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