Trade circles in Mumbai point out that De Beers seems to have taken this step in line with the prevailing situation in the market, where smaller and cheaper varieties are in strong, commanding premiums over the Syndicate's prices. The prices for such roughs will certainly rise. On the other hand, large good quality stones with slack demands at present, will face a price cut. That may, according to the trade, demolish the myth that the diamond prices never falls.

An official announcement made by De Beers in this regard says that "With effect from the sight commencing from September 28, 1999, the CSO will re-balance its price-book taking into account current market conditions and global patterns of demand. "The retail market in the USA has been performing strongly forsometime and there will be price increases in a number of categories of rough diamonds, which are ultimately sold into this market.

Conversely, the Japanese and South East Asian retail markets have been affected by the economic problems and the recent devaluation of currencies in South East Asia, has increased polished diamond prices significantly in local currency terms," said the official release.

"The over all impact on rough diamond prices across all categories sold by the CSO will be neutral," concludes the official announcement. Trade circles conclude from this that the prices of relatively smaller and cheaper roughs would be revised upwards, and those of better quality large stones would fall. But industry sources are unable to indicate the extent to which upward and downward revisions might take place. They are also unable to say whether there will be direct price variations or they will be made through variations in assortments or both. This will be known in course of time, theyadded.

Meanwhile, there is an acute shortage of small roughs priced around $50 per carat or lower. There are several reasons for this situation. There was a drastic reduction in the supply of roughs by the CSO in 1998, which led to the depletion of inventories. Secondly, until last year, substantial quantities of roughs from Russia used to enter the open market directly.

This has come down or almost stopped. Thirdly, the supply of small cheap roughs from Argyle, the world's largest producer of such stones, has come down. Mainly due to Argyle's pit widening programme, which has disrupted its production to certain extents. Secondly, the mineral that is being currently processed there is of lower grade. As a result its output of roughs, according to some earlier indications, might be just around 32 million carats compared with a little over 40 million carats in the previous year.

However, the proposed changes in prices of roughs may greatly help Argyle for better realisations. The most important consumermarket is the USA, but it mostly prefers moderately priced polished stones. India, which specialises in such products is also having a very good business. The trade is naturally in a cheerful mood, as exports of cut and polished diamonds in the first five months of the current year in volume-terms, have risen by 22.69 per cent to 124.93 lakh carats from 101.82 lakh carats and in value-terms by nearly 25.49 per cent to $2325.48 from $1853.06 million.