The rough diamond market is in a rut. Profitability has eroded, demand for polished is declining, and rough is just too expensive, especially for DTC Sightholders.

Demand for rough is so limited, that traders are not buying goods, even if offered at 12 or even 13 percent below what Sightholders paid for at last week's Sight. They simply do not have what to do with it. Traders cannot move it, and manufacturers claim that with the current decline in polished prices they will loose money.

Some Sightholders are willing to sell goods bought at the last Sight at a 15 percent loss, but would have been truly happy if they did not feel compelled to buy the goods in the first place.

After submitting their applications for the next Sight contract, today Sightholders are waiting for DTC's verdict. To not risk their standing in the company's eyes, they are buying more than they need, paying more than they can afford. To be fair, it must be stated that the DTC insists that if Sightholders want to turn down goods because they are not economical, they can with impunity. Sightholders would rather take a hit than take the risk.

One industry insider described the market with a four-letter word that rhymes with Brit. "Sightholders have been losing money since Sight 6,"he said, estimating the loss at 10-20 percent of box list price. Even with a relatively smaller Sight, estimated at less than $500 million, and assortments unchanged, it is too much for the market to digest at this point. The result is that many are simply shelving the goods, waiting for demand to improve.

From a low cost supplier, DTC has ascended to the pricier side of the list, along side Alrosa. Many lots went unsold at BHP Billiton's latest tender and Diamdel's auction, with bids falling short of the reserve prices.