HARARE(BullionStreet) : As Zimbabwe prepared for diamond auctions, over supply might affect prices this time, analysts said.

This week, DMC and Anjin are auctioning goods in Harare. DMC has offered about 400,000 carats and Anjin is offering another half a million carats.

Two other Zimbabwean miners, Mbada and Marange Resources, are offering another 700,000 carats for a total of some 1.6 million carats.

Zimbabwe diamonds started to flow into all major markets of the world after the international diamond regulatory body Kimberly Process (KP) allowed their exports from the controversial Marange fields.

In the past, the Zimbabwean goods were valued at around $40 per carat. Clearly, the market is not short on rough goods. Anjin, which is sitting on a large stock of rough, estimated at more than 4.5 million carats, knows this and is therefore refraining from offering all of its goods.

However, they said this is a temporary, short-term issue and could be over quickly.

There are two concerns in the diamond market, price and necessity. The price of diamonds, from a manufacturer's standpoint, is still high. A number of traders stated that Sightholders and manufacturers are losing money, mainly because the boxes that are sold are sold for below the original DTC price.

The bottleneck seems to be polished diamonds. While the prices of rough are continuing to recover since their July fall, polished prices are largely steady. In addition, many manufacturers have large and growing stocks of polished.

These inventories were created as a result of having rough and manufacturing it rather than because of demand from buyers of polished diamonds – jewelry manufacturers and retailers.

This combination of a slow polished market and continued manufacturing for stock is discouraging rough diamond purchases