Tender Report August 2023
Market Overview:
There appears to be little change to the overall position within the industry, with high levels of polished inventory, and sluggish demand in the leading consumer markets continuing to dampen spirits.
The rough price reductions made by De Beers last month have to a degree been negated by further reductions in Rappaport polished prices, and driven a subsequent drop in rough prices on the secondary market. No further price adjustments were made this month, but greater flexibility on volumes that are purchased will be introduced for the remaining Sights of 2023.
Goods that to date have remained in demand, namely smaller sizes -3gr, and cheaper goods, have also finally begun to soften in price over the past month by between 3-8%.
A concerning outcome of the unsustainable high prices that have been paid in recent months for smaller sizes has been a move to HPHT goods produced in China to keep factories running. It is reported that factories in Surat bought between 4 and 5m carats of HPHT smalls to maintain factory production. Most factories in Surat now have units to polish Lab Grown Diamonds.
Publication of Alrosa H1 sales totaling $1.9 billion has further depressed prices in smaller sizes. All eyes are now on the important period between Thanksgiving in America and Chinese New Year, which is traditionally the peak selling period. The coming months would under normal circumstances witness a surge in manufacturing to meet upcoming demand. However, a major factor facing the industry in the second half is ongoing economic uncertainty coupled with high levels of polished inventory in the midstream.
The long anticipated growth in Chinese demand, has unfortunately failed to materialize which has dampened consumer confidence. Manufacturing in India has reduced significantly during 2023, with a corresponding reduction in polished exports in the region of 65% on last year. This is largely a result of declining demand from US and Europe, after the strong rebound in polishing last year combined with economic uncertainties throughout 2023. This combination has led to the significant increases in inventory.
The effect of Lab grown diamonds continues to severely impact the demand for the lower quality natural products, resulting in significant stock accumulation across many SI ranges. Lab grown has allowed consumers to buy eye clean qualities for the same price, or less, than natural stones with more visible inclusions.
TAGS Tender:
TAGS hosted the August tender from their new world class facility on 16 th Floor of Almas Tower. Customers unanimously praised the new facility, and welcomed the new technical enhancements and improved buyer experience the new facility provides.
We presented a smaller volume of goods than normal, in the region of $15m, a volume which customers seemed to appreciate given the current market position. Goods focused on Southern African productions across a full size range, predominantly in the better qualities.
In total some 110 companies were in attendance from all the major centres. Prices achieved were in line with the current market echoing the weaknesses in certain sizes and qualities. We had some withdrawals in these areas, but overall were satisfied with the level of sales achieved.
Our next Tender will take place between 20th - 26th September.
