Fortunately, diamonds are not a unidimensional product. In order to understand its market, you should try to think outside of the box.
What is happening now, is that easy-to-sell-polished goes into sightholder-controlled or sightholder-maintained retail projects, and its rough is difficult to find for smaller-size cutters and on wholesale-markets. This is because it is important for sightholders to score in the eyes of DTC now, at this very moment, since this month, the remaining and new sightholders are chosen based upon their success in marketing downstream.
Now, you should try to understand which polished is easy-to-sell and why. Examples are oversizes, like 5/4 (1.25-1.49), and colour-clarity-combinations like H-SI1 (up-facing white and definitely eye-clean). With an over-demand for these easy-to-sell goods, this will also create an over-demand for this rough, and you can be sure that the rough suppliers (including DTC) will raise their prices for this rough.
Now, there are two long-term possibilities.
One, DTC encourages its sightholders to invest more in marketing, to invest in more services to their big retail customers, and to take more of the investment cost of supplying diamonds downstream (longer time before the final sale, and higher interest-expenses). In short, this costs the sightholder more, but he will benefit by a higher profit margin. If DTC supports this scenario, it will leave its prices of rough such that the sightholder can maintain its extra investments by receiving a higher margin. In that case, the room in the market remains for smaller cutters, and the present period is just a temporary problem caused mainly by the selection of sightholders at this very moment.
Two, the other scenario. DTC does not have an unlimited supply of rough diamonds to sell, so it is in their best interest to maximize their salesprice to sightholders. So, there is a possibility, that after a number of sightholders has been successful in creating a downstream-activity which brings them a higher margin, that DTC takes away the cream of that extra margin by raising their prices of rough. In that case, sightholders will end up in a situation in which they invest and risk more in order to receive the same profit-margin. Also, in that case, there is still room for smaller cutters, but in a different way. With sightholders getting smaller margins for more work and risk, they will be pushed into the mainstream of the market. Investing in specialties is way too costly, difficult and complicated then for the big sightholders, so this will become the playground for smaller cutters.
It will be very interesting to see which of these two predictions will come true.
Live long, and see for yourself,
Paul