De Beers, the diamond industry giant, has made headlines by slashing rough diamond prices by 10%–15% at its latest sight, a move described by Bloomberg as a "historically large reduction." This marks the first significant price cut by De Beers in 2024, a departure from its usual practice of offering flexibility and the right to refuse goods rather than lowering prices outright.
Market Reactions: Relief or Alarm?
Industry experts have expressed mixed reactions to the timing and impact of this decision.
Market analyst Paul Zimnisky explains the rationale behind the price cut, noting that De Beers’ parent company, Anglo American, has placed it up for sale. However, he questions the timing. "The polished market was just starting to show signs of stabilizing, and sentiment was healing," Zimnisky says. He warns that this price cut could disrupt the fragile recovery, eroding manufacturer margins and undoing efforts to stabilize supply fundamentals.
Another industry insider, speaking anonymously, criticized the move as a “sign of desperation” and “irresponsible,” highlighting its potential to devalue inventories right before the crucial holiday season. They emphasized that this undermines natural diamonds’ key selling point—their ability to retain value better than lab-grown diamonds.
The Lab-Grown Diamond Factor
De Beers’ price adjustment comes amidst declining prices for natural diamonds since the COVID-19 pandemic. However, these reductions have not been as dramatic as the plummeting prices of lab-grown diamonds, which have seen steep declines in recent years. The move has sparked concerns about the comparative value of natural diamonds in a market increasingly influenced by lab-grown alternatives.
Sightholders and Future Strategies
Sources indicate that De Beers is enforcing its 2021 contract rule, which requires sightholders to purchase at least $15 million worth of goods annually. Those failing to meet this threshold in 2024 will retain their sightholder status in 2025 but lose their guaranteed supply rights under the “intentions to offer” (ITO) process, limiting their ability to purchase goods ad hoc.
De Beers’ new sightholder contracts, set to take effect in 2026, aim to build "deeper relationships" with fewer partners, according to CEO Al Cook. Speaking at a recent diamond conference in Antwerp, Cook emphasized the importance of streamlining partnerships to enhance industry stability.
The Road Ahead for De Beers
De Beers spokesperson David Johnson remains optimistic, citing "stabilization in polished diamond prices" and declining retail and midstream polished diamond stocks as positive signs. Johnson adds that engagements with sightholders regarding 2025 contracts will commence soon, as the company continues to refine its long-term strategy.