De Beers is taking more drastic steps to stem the crisis in the diamond industry by cutting prices across the board for the first time in years.
The company, the world’s biggest diamond producer, lowered prices by about 5 percent at its November sale, according to people familiar with the matter, who asked not to be identified as the information is private. The move is aimed at helping improve profits for the middlemen of the diamond industry, a group of traders and polishers that buy rough gems from De Beers. Many of these customers, which includes family-run traders in Belgium, Israel and India, as well as the subsidiaries of Tiffany & Co. and Graff Diamonds, are running on wafer-thin profit margins because of low prices and an oversupply of polished gems.
“De Beers is a price setter and has not made any price cuts thus far, despite the open market price for rough diamonds falling by about 9 percent year-to-date. The most important market participant finally taking action after holding out for so long feels like a fairly typical indication that things may be about to improve,” said Edward Sterck, an analyst at BMO Capital Markets.
The price cut is unlikely to trickle down to the retail market and consumers shouldn’t expect to see diamond prices getting cheaper anytime soon. — Bloomberg.