Sightholders noted that the adjustment was not enough to counter the recent devaluation of the rupee against the U.S. dollar, which has impacted liquidity and sentiment among Indian diamond manufacturers.
“It was a difficult sight,” said Nigel Simson, the recently appointed senior vice president of global sightholder sales at De Beers. “There was a lot of focus on the rupee as it kept moving during the week, creating some concern. We did adjust prices, but we’re not in a position to follow the rupee.”
The rupee slumped to a record low of 69.22/$1 on Wednesday during sight week. The currency fell 8.1 percent during August, recording its worst month since 1992, according to Bloomberg.
One India-based sightholder noted that liquidity in the manufacturing sector is tight due to the weak rupee and as banks have become more prudent in their lending to the industry. “Liquidity is the biggest issue at the moment,” he stressed. “There’s no activity on the secondary market and people are not buying without 90 to 120 days credit.”
Most sightholders who spoke with Rapaport News said they expect De Beers will reduce prices at the October sight due to the lack of liquidity in the market. “People are not happy,” said one sight participant. Sightholders are starting to take a different approach and are refusing goods because they feel that enough is enough. They are not prepared to take the losses that they have in the past two years anymore.”
Rapaport News estimates that up to $80 million worth of rough was refused at the sight.
While De Beers reduced prices by an estimated 3 percent to 4 percent in the Indian boxes, prices on average remained basically the same. Assortments were unchanged and there was very little ex-plan supplied at the sight.
Simson noted that De Beers expects the market will improve in the coming months and that global diamond demand is still projected to grow in 2013.
“We’re about to enter a crucial time when the retailers and wholesalers are looking for goods for the holidays, and we feel that the retailers are fairly low stocked,” Simson said. “Soon the peak season will begin with Diwali and Thanksgiving and the U.S. holiday period, extending through the first quarter for the Chinese New Year. So it’s understandable that the manufacturers are holding stock and that liquidity is tight.”
Mike Aggett, managing director of H. Goldie & Company, a diamond brokerage and consultancy, suggested that retail demand will likely be late this year, thus adding to manufacturer’s liquidity challenges.
“Many areas of polished have also seen prices soften over the past few months putting additional pressure on manufacturers,” Aggett wrote in his blog about the sight. "And while a selling season is expected, particularly in the American market [with] report[s] [regarding] low stocks at the retail level, demand is almost certainly going to be late with retailers putting even further pressure on cash strapped manufacturers."
The next sight, which will take place in the first week of October, will be the final sight that De Beers holds in London. The company is on schedule to transfer its global sightholder sales division to Gaborone, Botswana in time for the November sight.
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