Its decision can affect the amount of goods that customers will buy

The diamond industry continues to face challenges that require a serious rescue plan, and diamond mining companies are beginning to respond to the crisis with measures that will bring relief, albeit temporary.

DIAMOND DESTRUCTIVE COMPANIES START TO RESPOND TO DIFFICULTIES OF DIAMOND MANUFACTURERS

In the last few days, some of the leading diamond mining companies and diamond suppliers have responded with serious measures to the developing crisis in the diamond and diamond industry. In a message to the sightholders, De Beers stated that they "understand that there is currently a seasonal lull for trading", giving them the opportunity to postpone up to 25% of the total allocated to them (excluding entire out-of-plan boxes).

An interesting point about this is that, in contrast to the usual delays, which should be applied in advance, the decision to postpone the additional goods can be taken on the site. In this case, the Sightholders can first look at the product, discuss the prices (which become known only on the site) and only then decide to take, refuse or postpone the box.

Site 6 is estimated at $ 600- $ 650 million, judging by the intention to make an offer (ITO). Along with the deferred volumes according to the submitted applications (at a rate of 25%) additional delays can reduce this site by half, by about $ 300- $ 325 million to unscheduled volumes and diamonds at a sharply reduced price. Very few applications for additional volumes were submitted.

Currently, it is not known whether De Beers will ever be going to cut prices in addition to the usual price adjustment. Currently, the trend on her part was a slow decline in prices. The market appreciates this, because it does not want the value of existing drains to fall sharply, and yet the market wants the rate of decline in prices to accelerate a little.

The additional delay is an important measure taken by De Beers, nevertheless it still has a large volume of supplies to the market. According to information received from some insiders from the diamond and diamond industry, the market requires diamonds for only $ 250 million to fulfill certain orders.

One of the market insiders suggests that De Beers offers sightholders Sightholders Specials (diamonds at a sharply reduced price) - diamonds weighing 10.8 carats and higher at a price that will provide them with a high margin, say 50 percent. In the past, De Beers acted so as to actually make discounts. The total margin from such goods was high enough to ensure profitability.

This is a good idea among other ideas, because the current stock of diamonds is not depreciated. The downside is that De Beers needs to have Specials available for this. They are rare in nature. In addition, this means that De Beers will have to decide to abandon the profits that they themselves could get by selling Specials at full price.

ALROSA AND RIO TINTO TAKE MEASURES

The Russian supplier ALROSA also reacts to the difficulties existing on the market, offering the opportunity to reject up to 20% and to give up another 20% of the volume in July. Alternatively, customers can postpone up to 30% of the allocated volumes. ALROSA also informed customers that it does not reduce prices, except for the prices of a number of large stones.

Like De Beers, it is possible to postpone the volumes until August, which means that confusion with large supplies was avoided (or at least postponed) until August.

But Rio Tinto Diamonds decided to go the other way. It is reported that it lowered prices, and then gave its customers the option not to buy back the goods within two months. In view of the decline in prices and the relatively low volume of Rio's offer, traders plan to visit the week of sales and probably purchase a certain amount of goods, depending on the real need.

PRICES OF THE COMPANY DOMINION HIGH?

A few weeks ago, Dominion held a tender to determine the price. It is a tool used to form the price of its rough diamonds. Over the weeks since the tender, diamond prices have fallen even more.

Now Dominion's clients ask the question: "Will the company adhere to the results of this tender or lower the prices? Its decision can affect the amount of goods that customers will buy. "

MEASURES OF HARD ECONOMY IN THE DIAMOND-BRILLIANT INDUSTRY

It would be wrong to say that what is happening in the middle of the diamond pipeline is similar to what is happening in Greece; But there are several parallels. As the current situation in Greece threatens to drag the European economy and banks even into greater chaos, the state of the polished diamond sector does the same with the diamond-diamond industry.

In dictionaries, several definitions of the word "austerity" are given. Investopedia provides a simple definition: "the state of reduced costs and increased savings in the financial sector," which seems to be the most appropriate for this situation.

To put it briefly, Greece was badly run, allowed large monopolies and power centers of power to dictate many economic decisions, while making large borrowings to make ends meet. During the negative consequences of the 2008 economic crisis, Greece was balancing on the brink of a financial abyss and was forced to resort to austerity measures.

From the banks' point of view, they wanted Greece to return the borrowed money. But disputes continue about who is to blame, who should pay, how many should be paid, what measures are needed to save the country's economy and what exactly are the measures for "saving"?

Most diamond companies use a lot of borrowed funds and are heavily in liabilities to banks. This led many diamond manufacturers to the situation when they are doing business with the sole purpose of maintaining their credit lines, so that banks can see that they have business to continue the business. This is partly the reason for the fact that diamond deals are declining.

http://edahngolan.com/the-diamond-austerity/