The De Beers Group of Companies has announced that its Auction Sales business will launch a pilot to for fixed-price forward contract sales, with the first such sale covering the Grainers, Smalls and Near Gem categories of rough diamonds, taking place on February 16, 2017. The pilot will offer three-month forward contracts on a fixed price basis, the Company said in a statement.

The contracts would guarantee access to future supply with certainty over the price to be paid when the contract reaches maturity and could provide a highly effective supply sourcing option for small and medium sized enterprises which are seeking access to regular rough diamond supply at a predictable price, De Beers said.

The Auction Sales division has been offering forward contracts for some time now, guaranteeing future supply, but with a ‘floating’ price based on the spot price at the point when the forward contract matured. Since its launch in December 2013, the forward sales channel with a floating price has sold more than 350 bespoke supply contracts, De Beers said.

It added that the new fixed price forward contract has been developed in response to customer feedback.

Neil Ventura, Executive Vice President of Auction Sales, said: “Extensive customer dialogue has highlighted potential to further develop the forward market for our rough diamonds. Our customers have told us they see value in securing short-term supply contracts but would prefer to do so on a fixed price basis, avoiding potential challenges when securing contracts on a floating price basis that references the underlying spot price at contract maturity.

Ventura added that the three-month forward contracts on a fixed price basis pilot would complement the spot sales channel by Auction Sales and the term supply contracts offered by Global Sightholder Sales. It would “further test stated customer demand for regular, guaranteed short-term supply at a fixed price,” he noted.

The pilot for fixed-price contracts follows other Auction Sales pilots, including those enabling third parties to use its auction platform for rough and polished diamond sales.