first major event of the year was last week’s overall 3% price increase
by De Beers’. On top of that, sightholders are looking at an extra
charge of probably 2%, in order to contribute to De Beers’ promotional
budget. All together, this is already an overall increase of over 5% on
rough prices, with bigger sizes and better qualities carrying higher
In the following months, we are going through a
new selection round of ‘Supplier of Choice’, in other words, the
selection of which company will continue to belong to the small group
of clients of De Beers’, which underperforming ones will be ousted, and
which new companies might be added to the list.
With the race
on to stay in the sightholders-game, cutters cannot afford to appear
weak. This puts a very high bottom under rough prices, and even with
many manufacturers making losses on the current prices, they will
continue to take in as much rough as possible.
2005, there is nothing but upward pressure on rough prices. On the
supply-side, Alrosa will probably start selling more through its own
channels, and we will also see a race between manufacturers, to get in
Furthermore, in producing countries, we will see more
pressure for local beneficiation. This will prevent the most
interesting rough from becoming available on the Antwerp market.
underlying reason for this upward pressure on rough prices is simple.
On the supply-side, we have seen very few developments of substantial
new mines in the last years. And for a manufacturer, what is the point
of having a profitable cutting operation, if one cannot buy the rough
needed to run that factory.
the labs’ side, we will see the launch of new cut-grading systems.
First will be the princess-cut of AGS by the end of the first quarter,
followed by their new system for round brilliants towards the end of
the year. GIA has also announced the launch of its cut-grading for
rounds, but do not be surprised if it will be postponed.
the launch of AGS’ princess cut-grading will probably shake the market.
Their research has shown that about 75% of the currently available
princess-cuts would score 5 or lower on the AGS cut-grade, so one can
reasonably expect a lot of turmoil in the princess-market.
the retail-side, it will be a very difficult year for mall-stores and
for independents, not stressing their level of service. In the most
popular sizes, retailers relying on memo-supply will have great
difficulties in supplying their customers.