Diamond Rods are crafting materials that can be made in a Processor.
Like with everything else crafted in the Processor no recipes have to be unlocked for this.
Or 4 Diamond Rods can also be processed from 1 Diamond Slab each.
Diamond Rods are used for different crafting recipes, like for Lumite Swords, Lumite armor, Super Excavator, Diamond furniture and a number of Lumite building blocks and Diamond building blocks too (as of R26 in December 2015).
Diamond Rods are no blocks, so (currently as of R26 in December 2015) they cannot be put into the quick-bar, cannot be placed into the world and cannot be displayed on Wall Shelves, in Wood Planters nor in Flower Pots.