De Beers Announces Price Increase

[pricescope]

De Beers’ DTC announced that it plans to raise its prices of rough diamonds by an average of 3% with most categories starting from January 2004.

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It doesn''t mean immediate increase of retail prices though. It can usually takes 6 month until the wave will reach the end consumer.

 

[fire&ice]

Interesting. Historically, what percentage does Debeers raise their prices? Have they ever decreased their prices?

Also, my thoughts - stream of consciousness here - I wonder if smaller diamonds were a big hit this season as it seems like the gift of choice were diamond studs. Is there a chart that we can see the breakdown of sales by carat weight? What size & for what purpose were the diamonds purchased for?

 

[niceice]

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On 1/8/2004 11:17:27 AM fire&ice wrote:

Interesting. Historically, what percentage does Debeers raise their prices? Have they ever decreased their prices?----------------

The percentage of the price increase is in-line with the degree of increase implimented in past years... And Leon is correct, it will take several months for the increase to be felt in the retail environment. Think back in time to May of 2003 when the DTC Increased Diamond prices 4.5++ % and there was a lot of speculation that the price increase wouldn't hold and wouldn't affect the market... It took about four months for the purchase price of diamonds on a dealer level to be affected, but the Rap price of diamonds didn't change until mid-November and even then it was only by a percent or two. What did change was the discount off of Rap that we as dealers were being charged by our suppliers... Discounts off of Rap reduced significantly and thus the selling price of the on-line dealers off of Rap was reduced appropriately... So what might have been purchased at 10% off of Rap a year ago, now sells for 5% off of Rap... We're explaining this for those of you who have been watching Rap and haven't seen more than a percent or two increase over the past six months.

We explained what usually occurs when DeBeers announces a price increase in the thread linked in the above paragraph so we won't go into it here...

In response to Fire & Ice, we sold a ton of diamond earrings this year, they were definitely in demand. However we also sold a lot of diamond diamond engagement rings, diamond pendants, diamond tennis bracelets and pearl necklaces. In terms of percentages, diamond engagement rings probably made up 80% of our fourth quarter sales, with diamond earrings being about 10% and diamond pendants about 5% and the combination of tennis bracelets and pearl necklaces being 5%. We didn't sell any colored stone jewelry, gold bracelets, etc. which is unusual...

 

[fire&ice]

Thanks NiceIce. Curious, can you reveal average size, etc breaking down e.r. & E-rings.

 

[strmrdr]

hmmmm the vedors are going to hate me for this but maybe its time for a boycott, consumer backlash to tell debeers to stick it. :}
After all they have been sticking it to consumers for long enough.

 

[kimong]

Totally off topic and dumb question, but why are tennis bracelet called that? Was it once the norm to wear them while playing tennis? If so, geez, I wanna play tennis now!

Is there a way to stop deBeer's monoply. Reeks too much of Microsoft!

 

[caratgirl]

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On 1/8/2004 5:15:22 PM strmrdr wrote:

hmmmm the vedors are going to hate me for this but maybe its time for a boycott, consumer backlash to tell debeers to stick it. :}
After all they have been sticking it to consumers for long enough.


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Oh, sure, now that you have yours....

 

[niceice]

Fire & Ice, most of the diamonds we sell are between 0.75 - 1.49 carats. Although we should know what percentage makes up what weight category specifically, we've never taken the time to figure it out... A new inventory control system that is in the process of being implemented will enable us to provide you with that kind of information...

Boycott DeBeers? They only control like 40% of the market now... The other 60% doesn't seem to be doing you any favors either. DeBeers controlled something like 89% of the market in the late 1980's. Of course the numbers vary depending on which cutter we talk to so who knows for sure... Anyway you look at it, they continue to have major control over the price of diamonds, if they increase prices everybody else seems to follow suit. Suppliers have already told us that prices are going to be increasing, if not on the Rap, in the form of reduced discounts over the next year. They claim that they can not continue to produce ideal cut and fine make diamonds without increasing their profit margins

 

[strmrdr]

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On 1/8/2004 6:58:07 PM caratgirl wrote:

----------------

On 1/8/2004 5:15:22 PM strmrdr wrote:


hmmmm the vedors are going to hate me for this but maybe its time for a boycott, consumer backlash to tell debeers to stick it. :}

After all they have been sticking it to consumers for long enough.



----------------

Oh, sure, now that you have yours....

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I bought on the secondary market to avoid the local b&m's and get a better diamond than the mall stores.

 

[caratgirl]

Hmmm...smart. I did the same with the first stone I had. I had an opportunity for a 2.11ct E color, VVS1 for 11K, but it was a really bad cut, so I knew that I would have lost too much of the weight in a recut. Too bad, though, sure was a good price.

 

[BrianTheCutter]

Sorry guys - I disagree with you. According to my sources, we are going to see price increases impact the market more quickly than the usual 6 month delay. The Antwerp market returned from the Christmas/New Year break and the buzz around is “higher rough and polished prices”. The season for the wholesalers was strong so inventories are at much lower levels and they need to restock. When demand outstrips supply you know that you will get “ higher prices”.

This price increase on the heels of the previous increases will most surely impact prices, especially in areas where there are shortages of goods in specific combinations of color/clarity and size. I foresee this trend forcing some manufacturers to return to manufacturing for weight recovery primarily at the expensive of cut. Unless manufacturers have a good independent source of rough supply, this in turn will force the finer makes to become more expensive.

 

[Paul-Antwerp]

I think that you are under-estimating last year's price increases by De Beers.

Rapaport estimates it at a total of 15%.

What has it done to the price of polished: a slight increase on a specific area of goods, which is in short supply.

Who has taken the burden of the increases: the cutters, who have cut their expenses, streamlined their sales organisation, and so on.

Now, we are facing a new increase of on average 3%, but nobody knows yet which goods (size, quality, ...) will take the highest increase, while others remain at the same price. That will be next week's news.

What will happen to the prices to the public remains very difficult to predict. In the long run, it is impossible for prices of rough to continue to go up, and polished remaining the same. However, nobody knows what will happen in the transition period.

Live long,

Paul

 

[diamond dazed]

>>>>>On 1/8/2004 6:48:39 PM kimong wrote:

Totally off topic and dumb question, but why are tennis bracelet called that? Was it once the norm to wear them while playing tennis?<<<<<

Kimong, here's what I've always heard (copied and pasted from somewhere -- also verified with a interview with Chris Evert in the Denver Post):

Tennis Bracelet
Definition: Tennis Bracelet is another name for Eternity Bracelet - a continuous circlet of small diamonds.


Derivation: The term seems to have gained popularity in the mid-1980s, possibly after the incident referred to below.

Citation: "This year's most desirable fashion accessory is a tennis bracelet...[Chris] Evert wore a similar circlet of diamonds--previously called an 'eternity bracelet' by most jewelers--while playing in a televised tournament a couple of years ago. The bracelet flew off Evert's arm and play was interrupted until it could be retrieved. Courtside broadcasters dubbed the adornment Chrissy's 'tennis bracelet'. Shortly thereafter, it was to die for among female aficionados of the game, even those with lousy one-handed backhands."Chicago Tribune 1987-05-27.

 

[kimong]

Thanks DD for answering! Sounds like a good reason, though eternity bracelet sounds much better. It was something that was bugging me for a while, hoping to get one as wedding present from parents

and then it was mentioned on this thread.

 

[niceice]

Brian & Paul may be correct, we might see a more rapid increase in price from this DTC price increase than we did from the last price increase because availibility is extremely limited, especially for well made goods.

On a side note, there were 25 changes on the Rapaport pear shape list this morning, it affected diamonds in the 3.00 - 3.99 carat weight category by about 1%. The pear shape list is used by many dealers for emerald, radiant and asscher cut pricing as well.

 

[niceice]

As an update to this thread... Rapaport Diamond News reports today that Alrosa - the distribution network for the Russian diamond syndicate - increased prices from 5% - 10% for various sizes... This would level the playing field between them and the DTC by making them essentially even to the DTC when the 4% increase from the third quarter of last year and last week's 3% price increase are taken into account. Rio Tinto out of Canada remains unchanged for the moment, but if history is a factor, we can expet them to raise their prices accordingly in the near future if not next week.

 

[p5r799]

Niceice,
Is it okay for a retailer to show a customer the rapaport?

 

[pqcollectibles]

Sure, P5. I've seen the Rap Report several times.

Doesn't mean either the dealers that showed it to me or I understand it. There are too many intracacies that affect pricing for you to gleen any baseline secrets by looking at a Rap Report. Some jewelers will even indulge in using the Rap Report to reinforce their own asking price. It's called the "Rap Trap".

 

[Jaded Gem]

Since last month, I became disillusioned with putting a ring together based on a bad experience, and I was not thinking about purchasing another one for quite some time. But according to this thread, diamonds are going to get a lot more expensiver with time because of certain market forces. The irony...

 

[fire&ice]

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On 1/9/2004 7:11:22 AM diamond dazed wrote:


>>>>>On 1/8/2004 6:48:39 PM kimong wrote:


Citation: 'This year's most desirable fashion accessory is a tennis bracelet...[Chris] Evert wore a similar circlet of diamonds--previously called an 'eternity bracelet' by most jewelers--

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Great Sleuthing Diamond Dazed! To add though, they were also referred to as line bracelets. They were extremely popular in the 20's, 30's & 40ish - some done w/ beautiful austrian crystals hand set in sterling. Although a classic, the popularity slacked off until the 1980's. They still remain strong; but, it seems diamond studs are the flavor of the day and pave has made a bit of a come back.

All that said - any guess to which "c" will be the most affected? Some mention cut as to retain carat weight - would this apply to mostly larger stones? Or to which colors?

Diamonds confuse me. It's a market unlike *any* market. Can one buy futures? How can one hedge the market? By selling only to Debeer's people is controlling to the point of control freaking.

 

[bacon]

Basically they keep the price of diamonds up with current inflation. So look for more than just diamonds to go up.

 

[mike04456]

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On 1/16/2004 4:02:47 PM pqcollectibles wrote:





Sure, P5. I've seen the Rap Report several times.

Doesn't mean either the dealers that showed it to me or I understand it. There are too many intracacies that affect pricing for you to gleen any baseline secrets by looking at a Rap Report. Some jewelers will even indulge in using the Rap Report to reinforce their own asking price. It's called the 'Rap Trap'.

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All consumers need to know about the Rapaport price list is that it's a standardized method for people in the diamond wholesale market to communicate with each other. It is not, as is often supposed, anything like an "average wholesale price." It has no place in a retail setting, but unfortunately, some retailers like to use it impress customers. This is usually deceptive and sometimes fraudulent; it is definitely fraudulent if any retailer waves it in front of you while saying something like, "Look! I'm giving you this diamond below wholesale!"