JOHANNESBURG (miningweekly.com) – A further reduction in the price of rough diamonds is needed, according to the World Federation of Diamond Bourses (WFDB).

Last month Anglo American-controlled De Beers cut the prices of its rough by up to 10% and this month State-controlled Alrosa of Russia followed suit, against the background of diamond manufacturers laying it on the line that they simply could not be expected to pay high prices for rough at a time of falling polished prices.

Now WFDB said it expected to see the trend repeated at other diamond sales and tenders.

“I believe we need to see a further reduction in rough prices,” said WFDB president Ernie Blom in a media release sent to Mining Weekly Online.

Blom singled out the Indian manufacturing sector in particular for carrying out a much-needed downscaling of polished production and also drew optimism from this month’s “solid and stable” Hong Kong Gems and Jewellery Fair, which he said served as a useful barometer of diamond industry sentiment owing to the global nature of its exhibitors, buyers and visitors.

The decision of many diamantaires to hold off on manufacturing would also help put a firm floor under prices.

"We had a situation where there were simply too many polished goods on offer. Now that some major players have cut production, there will be lower levels of polished inventories and possibly shortages in some items,” said Blom, who believed a rise in business transactions would result.

He forecast lower levels of polished inventories and possibly shortages in some items as a result of the cutbacks of polished diamonds at a time when the work of World Diamond Mark to raise consumer demand was bearing fruit.

While the collective efforts were a cause for greater optimism, the situation in the diamond business remained “far from easy”, which was why a further reduction in rough prices was expected.

Last week alluvial diamond miner Rockwell Diamonds reported that it had averaged a 24%-lower $1 791/ct for rough diamonds on 28%-lower total diamonds sales over 12 months and miner Trans Hex reported 21%-lower dollar prices and 9% lower rand prices than those fetched in the 12 months to March 31.