CSO has not furnished any details of the volumes offered at these sights. However, informed sources said that the first three sights of 1998, offered during January to March, were of around $200-$250 million each. Fourth sight (in April) was said to be of $300 million and the fifth was of $350 million.

The sixth sight offered early this month is to the tune of $375-400 million while the seventh sight scheduled for July 6-9 is expected to be of $425-400 million.

CSO expects to continue increasing the number of its sights on a gradual basis to the point at which the supply will be equal to current consumer demand, `provided retail diamond consumption is maintained at the present levels.'

That CSO is likely to increase prices of its roughs was sounded byThe Financial Express in its CommodityWatch dated June 15.

In the domestic market, the diamond boxes offered by the Diamond Trading Company (DTC) have already begun commanding premium after a lapse of around 18 months.

The possibility of higher diamond prices is said to be a logical step after CSO's drastic cuts in its diamond supplies during the past 12 months.

In two six-monthly tranches since July 1997, CSO has cut diamond supplies by around 57 per cent after the record $2,880 million diamond sales in the first half of 1997.

During the first six months to June 1998, CSO cut its diamond supplies by 41 per cent to $1,700 million, compared to $2,880 million in the same period last year. With a 16 per cent cut in diamond sales to $1,760 million (from same period in 1996) this adds up to 57 per cent.

In rand terms, the diamond sales for the first half of 1998 were R 8,583, 34 per cent lower than in the same period last year.

In the first half of 1997, CSO had sold a record $2,880 millionworth diamond. In the second half of 1997, CSO had cut its diamond supplies to $1,760 million (16 per cent down from $2,086 million in same period in 1996). CSO's diamond sales in full calender 1997, was placed at $4,640 million, lower than $4,834 million in 1996 (1995: $4,531 million).

According to De Beers, the reduction in diamond supplies was to `support the market' which has enabled the diamond industry to adjust to the problems arising out of the south east Asian crisis.

With restricted sales from the CSO and the absence of any significant flow of diamonds from other sources directly onto the market, the supply of rough diamonds to the cutting centres is currently running below the level of retail consumption. This has allowed the cutting centres to run down their rough and polished stocks and it is estimated that these stocks are approximately US $1 billion lower than in July 1997.

The destocking process has allowed the industry to adjust to the changed economic circumstances, and there has beena noticeable improvement in trade confidence in the last few months.

The generally difficult market conditions have continued into 1998, and the CSO has consequently maintained its policy of severely restricting sales of rough diamonds -- the continued recession in Japan and the economic and currency difficulties that emerged in south east Asia in the second half of 1997, presented the diamond industry with considerable difficulties.

The contraction of the market in these areas, following the high level of supply in the first half of that year, meant that the industry found itself in an overstocked position.

Retail sales of diamond jewellery in 1998 continue to reflect economic circumstances, with strong growth in the USA, Canada, India and Europe. Sales in the Gulf states, China and Taiwan continue at reasonable levels but the markets in Japan, Korea, Thailand and Indonesia have declined further.

The impact of the south east Asian problems, which affected retail sales only in the second half of 1997,is likely to result in a further reduction in overall global diamond consumption in 1998.