In a significant move, De Beers announced a notable reduction in rough diamond prices during their recent sightholders meeting.
This strategic adjustment involves cuts ranging from 10% to as much as 25% for certain diamond categories, signaling one of the most substantial pricing shifts in the company’s recent history.
Breakdown of Price Adjustments
The scale of the reductions varies across different segments of the diamond inventory. Diamonds under 0.75 carats are now priced 5% to 10% lower.
The 0.75 to 2 carat diamonds have seen average reductions of 10% to 15%, while those over 2 carats are subject to a 15% decrease.
Most notably, the “select makeables” range, specifically 2- to 4-carat rough diamonds, are being offered at 20% to 25% lower prices.
Context and Catalysts for the Decision
This price cut is De Beers’ response to a confluence of market pressures.
After the pandemic-driven boom in luxury online sales subsided, the industry faced an oversupply, further compounded by inflation and the rise in popularity of lab-grown diamonds.
Geopolitical events, particularly the EU’s sanctions on Alrosa following the Ukraine conflict, have also influenced market dynamics.
In response to these challenges, De Beers and Alrosa temporarily halted sales in late 2023 to prevent a market collapse, a strategy that was lifted as signs of market recovery emerged.
Global Market Impact
This development, announced at the sightholders meeting, is poised to have a considerable impact on the global diamond supply chain.
The reduced prices could lead to more cost-effective procurement of rough diamonds, potentially affecting the final pricing of jewellery products. Bridal jewellery, a segment where substantial discounts are focused, might see a direct influence from these price adjustments.
However, despite these cuts, a sense of skepticism persists among some sightholders. Concerns that De Beers’ prices, albeit reduced, still surpass those at external tenders and auctions, raise questions about the long-term profitability for manufacturers and influence their purchasing decisions.
The growing market share of lab-grown diamonds, particularly in key markets like the US, adds another layer to the industry’s evolving landscape. This trend, which is reshaping consumer preferences, necessitates strategic adjustments from industry players.
The announcement at the sightholders meeting marks a pivotal moment for De Beers and the diamond industry at large.
While it opens the door to more competitively priced rough diamonds, it also highlights the need for the industry to adapt to changing market trends, including the increasing relevance of lab-grown diamonds.
Stakeholders across the global diamond market will be closely monitoring the impact of De Beers’ pricing strategy, which is expected to influence future market dynamics and strategic industry decisions.