Is De Beers planning to set up a trading office in India?
India is a strategically important market for us and we are very pleased with the recent announcement regarding the establishment of a special notified zone (SNZ) in Mumbai. We are keen to explore how this can help us expose more of our rough products to both existing and new customers based in India.
We operate a hub-and-spoke model, wherein we are headquartered in Singapore (the ‘hub’) and have a presence in Antwerp, Tel Aviv, Dubai and Hong Kong (the ‘spokes’) through which we manage our large, diverse customer base.
What are the challenges for Beers in shifting offices from centres such as Antwerp and Dubai to India?
India has the potential to become a major spoke in our global operations. We have about 600 registered customers spanning dealers, manufacturers of polished and jewellery as well as retailers operating domestically, regionally and internationally. Our network of offices in major markets provides convenient and low-cost access to our spot and forward contract sales proposition. We are keen to find out more about how SNZ will work.
Will change in the auction centres make any difference to De Beers in terms of realisation or quantity of sale?
Most of our India-based customers are currently served through our Dubai and Antwerp offices. SNZ potentially paves the way for our existing customers as well as new customers to be served in their local market, reducing travel time and associated costs.
However, whilst we would strive to expose the full range of our product mix to our customer base in India, should we set up a ‘spoke’ office there, our ability to do so would depend on how the special notified zone will operate. We will be engaging with the relevant bodies to determine this in the coming weeks.
How will it benefit Indian customers?
SNZ would enable us to expose our full product mix to all registered customers based in India. The principal benefit for Indian customers would be improved access to larger quantities of our full range of products either through forward contract sales, which provide short- and medium-term security of supply at market-determined prices.
The combination of spot and forward contract purchases can allow customers to build their own bespoke supply portfolios with us. The demand demonstrated with De Beers Auction Sales can, over time, enable customers to secure term supply contracts from De Beers, by contributing towards qualification for Sightholder status. However, our ability to offer these benefits would depend greatly on how the SNZ works in practice.
Rading sentiment in diamond is currently weak. What is your forecast for the rest of the year?
Overall, we anticipate a gradual improvement in spot market demand, driven by steady demand from the US. We also expect the solid demand we have seen year-to-date for higher value exceptional and special stones to continue.
Our short-term outlook for demand from some parts of the Asia-Pacific region is perhaps more cautious, but we remain optimistic about domestic demand in India as the Indian economy gathers momentum.