BHP and Rio Tinto Raise Prices Too

[pricescope]

"Compared with the April sight, BHP prices have risen 5 to 6 percent on average"

Full article: Rough Suppliers Continue to Raise Prices

 

[niceice]

You know, you really have to wonder how seperate the DTC, BHP, RT and Leviev really are -or- whether they are very much the same company being run by different front ends to avoid looking like a monopoly. There we said it, you can send roses to our funeral

But it seems to us that if the companies were in fact individual operations that one of them would go for the Lion's Share of the market by maintaining a reasonable price point, but when one raises their prices they all seem to follow one right after the other like a row of dominoes.

 

[CaptAubrey]

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On 5/27/2004 4:36:48 PM niceice wrote:





But it seems to us that if the companies were in fact individual operations that one of them would go for the Lion's Share of the market by maintaining a reasonable price point, but when one raises their prices they all seem to follow one right after the other like a row of dominoes.
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the problem with this reasoning is that "market share" in the rough diamond business is determined by the number of diamonds you're taking out of the ground, not competitive pricing. de beers has the biggest share of the market because they have the most diamonds, not the best prices. bhp and rio tinto are already selling everything they produce--how could they expand their share of the market? cutting prices would just cut their profits. plus, i strongly suspect that they're content to just follow de beers' pricing and rake in the higher revenue rather than get into a price war that they would surely lose given de beers' much greater resources.

 

[hoorray]

True, if they are at their capacity, cutting prices only cuts their profits. If they can sell the same amount for a higher price, other than for the greater diamond good, why would they?