Through slashing prices across the board for the first time in years, De Beers took more drastic steps to curb the downturn in the diamond industry.
The world's largest diamond maker has cut its prices by about 5 percent, according to people familiar with the matter, who asked not to be identified.
The move aims to help improve profits for the diamond industry's middlemen, a group of traders and polishers who buy De Beers' rough gems.
Many of these clients, including family-run dealers in Belgium, Israel, and India, as well as Tiffany & Co. and Graff Diamonds branches, work on wafer-thin profit margins due to low costs and excess supply of polished gems.
"De Beers is a trend-setter and has not made any price cuts so far, given the year-to-date drop in the open market cost of rough diamonds by about 9 percent," said BMO Capital Markets analyst Edward Sterck.
After holding out for so long, the most important market player finally feels like a fairly typical sign that conditions may be about to change, sources said.
Price cuts are unlikely to trickle down to the retail market and customers shouldn't anticipate diamond rates to get cheaper anytime soon.
Part of the diamond industry's problem is that prices stagnated as other luxury offerings, such as shoes, handbags and resort vacations, crowded the field.
It is also more difficult for diamond trading companies to find financing because after being hit by fraud and bad loans, banks are leaving the sector.
Still, De Beers insisted that demand has not been softened by the current weakness. The company released data last week that showed a 2.4 percent increase in demand for diamond jewelry last year.
The increase was 4.5 percent in the U.S. market, where nearly half of all diamonds are sold. Some sightholders are now struggling to make money from a once highly lucrative business.
De Beers markets its gems every year in Gaborone's capital of Botswana across 10 deals, and customers - regarded as "sightholders" - should embrace the cost and the amounts they are sold.
It is a system that originated in the 1890s and is intended to benefit both the miner and the customer who receives the diamonds at a discounted rate. But the discount has shrunk.
De Beers offered more flexibility in their purchases to their buyers, but it wasn't enough. In each of the past three sales, the company made less than $300 million, which is the lowest in data since 2016.
Anglo American Plc, which owns De Beers, wrapped up 1.9 percent at 2,080 pence in London trading late Monday.
