De Beers Auc­tion Sales Opts For Fixed-Price For­ward Con­tracts

Solitaire - - SPECTRUM -

De Beers an­nounced that its auc­tion sales busi­ness is to tran­si­tion Fixed-Price For­ward Con­tracts to core busi­ness sta­tus, fol­low­ing the suc­cess of the pilot pro­gramme that was launched in Jan­uary 2017.

Fixed-Price For­ward Con­tracts of­fer the op­por­tu­nity for auc­tion sales cus­tomers to se­cure guar­an­teed ac­cess to be­spoke fu­ture sup­ply con­tracts, with cer­tainty over the price to be paid when each con­tract reaches ma­tu­rity.

Orig­i­nally de­vel­oped in re­sponse to cus­tomer de­mand for short-term con­sis­tency of sup­ply, De Beers’ auc­tion sales busi­ness tran­si­tioned away from the prior float­ing price for­ward sales mech­a­nism and has ex­pe­ri­enced in­creased cus­tomer de­mand for its fixed price mech­a­nism, es­pe­cially from busi­nesses in Bel­gium, In­dia and Is­rael. A to­tal of 222 Fixed-Price For­ward Con­tracts were sold dur­ing the pilot, with to­tal for­ward con­tract sales ac­count­ing for 10% of auc­tion sales’ rev­enues in 2017.

Neil Ven­tura, ex­ec­u­tive vice-pres­i­dent, auc­tion sales, said: “The re­sults from this pilot have been very en­cour­ag­ing, and have val­i­dated our un­der­stand­ing of cus­tomer needs and that the so­lu­tion we have been test­ing meets those needs ef­fec­tively.

“Cou­pled with the in­vest­ments we have made to of­fer one of the in­dus­try’s most con­sis­tent prod­uct of­fer­ings, we are now ready to tran­si­tion the fixed for­wards pro­gramme to the next stage in its de­vel­op­ment by of­fer­ing a broader range of highly con­sis­tent prod­ucts over longer con­tract ma­tu­ri­ties, with flex­i­ble sup­ply op­tions up to five months into the fu­ture.”

From Jan­uary 2018, cus­tomers will ex­pe­ri­ence a wider range of prod­ucts be­ing made avail­able for one-, two-, three-, four- and five-month for­ward de­liv­er­ies, en­abling cus­tomers to con­struct be­spoke sup­ply con­tracts to suit their busi­ness needs.

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