24 May 2017
DiamondWorld Directory
Home |
Rough Diamond Auctions-Do Rough Auctions Promote Price Volatility?
Volatility in rough prices has distressed midstream players. We are way past the worst of the global financial crisis. The market is in recovery mode. Yet unpredictable prices hold sway. A section of industry believes that the increasing number of diamond tenders and live auctions by ambitious diamond producers have led to price instability, so that steady availability of diamonds auctioned less than two weeks apart throughout the year comes at a cost for the manufacturer. For the producer, auction yields test market appetite and lead to price discovery while ensuring maximum profits. Do auctions reveal ‘true’ market prices or make prices volatile? Aasha Gulrajani Swarup explores.
By: Diamond World News Service
Apr 21 2017 12:25PM
Reference: 15116  

Nearly all mining companies hold diamond auctions. In fact, a single major diamond producer held 121 diamond auctions last year. There is an auction within a gap of two weeks or less.

Auction Boom
While auctions may have been initiated as an innovative measure to boost bottom lines and tide over the global downturn, many midstream players believe that numerous diamond auctions held by major producers today, spurs price uncertainty and volatility.

Informs Neil Ventura, Executive Vice President of Auction Sales for the De Beers Group of Companies; “De Beers sells 90 per cent by value of its available supply of rough diamonds to its Sightholders every five weeks or 10 times in a year. In addition, we have about 100 individual events each year, which are a combination of different auction types, such as spot auctions and fixed price forwards, for different types of diamonds such as grainers and smalls. Sightholder sales is an entirely different business unit from auction sales.”

These auction events include the recently phased out old forward contract sales on a floating price basis which is replaced with the Fixed Price Forward Contract sales, introduced as a pilot in February 2017.

“So De Beers will have 10 Fixed Price Forward Contract sales auction events each year in addition to spot sales that take place every two weeks and within the spot sales there are individual events for different types of goods, adding up to more than a 100 individual events. In 2016, we held a total of 121 spot and forward auctions.” explains Ventura.

Producers Promise SteadySupply
Other producers, like Rio Tinto and ALROSA too have various tendering and live auction events every year in addition to term contracts with a select group of diamantaires with whom they have supply commitments.

Patrick Coppens, General Manager, Sales and Marketing, Rio Tinto Diamonds elaborates, “Rio Tinto’s rough diamond productions is committed to long-term contracts with our Select Diamantaires, with about 20 per cent on average offered in five spot auctions per year called Rio Tinto Diamonds Invitation Sales.”

While Rio Tinto auctions its pink diamonds from Argyle each year, De Beers auctions 10 per cent of http://www.diamondworld.net/gfx/editContent.gifBotswana’s production though Okavango Diamond Company, while ALROSA

Evolution of Diamond Sales
Auctions are the new face of diamond sales and the obverse of the traditional Fixed Price Sight System. In between, trade and direct negotiations also help diamond sales. While all systems co-exist, auctions can singularly optimise profits for the producer and deliver value to participants in terms of meeting flexible supply demand. Rough diamonds are today sold by tender and live auctions with bidding in real time and won by the highest bidder at the closing time.

Tender Sales
Tender sales are silent auctions where participants submit bids for various lots of roughs. Tender sales give smaller players access to direct supplies of rough.

Spot Auctions
Rough diamonds are also sold through spot auctions. There is no reserve starting price. Participants bid while stating the quantity of goods they want to purchase. Goods are sold and delivered immediately. Spot auctions help to establish prices. Special spot Auctions help to sell larger stones.

Online auctions
In online auctions, participants from anywhere in the world can bid for rough diamonds. Goods are visible to all participants. Buyers can make multiple offers on a parcel and bid as high as they are willing to pay. Internet auctions were started by De Beers in January 2008.

First | Previous | 1 | 2 | 3 | 4 | Next | Last | All

Have Your Say
* Your view  
* Name:
* Email:
* Town/city:
* Country/State:
HouseAd_Trade Fair
Search News by City
Kosher 23460
HouseAd_Trade Fair
Recent Issue
Kosher 23460
News in Pictures
Basel World 2017
Pictures: 31
GJEPC 50 years celebration
Pictures: 8
Mines to Market Conference 2017
Pictures: 28
Pictures: 7
HKTDC Hong Kong International Jewellery Show 2017
Pictures: 25
43rd India Gem and Jewellery Awards
Pictures: 29
September Hongkong Jewellery & Gem Fair 2016
Pictures: 12
Diamond Financing 2017
Pictures: 18
IIJS Signature 2017
Pictures: 27
JNA Awards 2016
Pictures: 25
JJS - IJ Jewellers Choice Design Awards 2015 powered by GIA
Views: 5439
GJEPC Chairman Interview
Views: 4820
IJ Jewellers Choice Design Awards 2012 - Part 1
Views: 10780
Promo for IJ Awards 2012 at NDTV Profit
Views: 19870
IJ Jewellers Choice Design Awards 2012- Part 2
Views: 23996
Couture India 2016 - A Business Boutique Show by IJ Magazine
Views: 4278
Savjibhai Dholakiya, Surat Businessman (Diamond Merchant) speaks in Vibrant 2015
Views: 20578
IJ Jewellers Choice Design Awards 2013 - NDTV Video
Views: 22400
Member of:
Supporter of: