De Beers Eases Diamond Allocation Rules as Market Pressures Mount

De Beers has announced new measures to increase flexibility for sightholders in response to the current market downturn. These changes, intended to support clients without lowering prices, will be implemented during the July sight starting next Monday. This adjustment comes as a reaction to rising inventories and falling polished diamond prices, particularly in India.

Enhanced Flexibility in Allocations

Sightholders will now be able to refuse up to half of the lots in three boxes of medium- and higher-quality rough diamonds under 0.75 carats. Normally, refusing these allocations would lead to a reduction in future contract periods. However, this month, De Beers is offering this flexibility without impacting future allocations.

Additionally, sightholders with beneficiation factories in diamond-producing countries, such as Botswana, will be allowed to remove lots from an additional 21 boxes. This move aims to provide these customers with more control over their inventories and profitability.

Increased Buyback Options

De Beers is also increasing the buyback options for sightholders. Usually, sightholders can sell back up to 10% of certain rough diamond purchases by carat weight to De Beers. This cap has now been raised to 30% for 13 boxes and four categories of unaggregated goods from De Beers’ Namibian operations. This concession allows sightholders to return less profitable goods without future allocation penalties.

Market Implications

These measures are expected to stabilise prices and reduce financial strain on sightholders. “Providing sightholders with some elements of supply flexibility to support their requirements” reflects De Beers’ approach to maintaining market stability without reducing prices, according to a company spokesperson.