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Alrosa Upbeat as Diamond Sentiment Improves

‘Alrosa gave a positive assessment of the diamond market ahead of the holidays after rough and polished trading picked up in the third quarter.

The Russian company’s rough-diamond sales climbed to $552.9 million during the three months ending September 30, compared with $74.1 million in the second quarter, it reported Friday. Sales declined 8% year on year, a less severe slump than the 11% slowdown it recorded in the first quarter and the 91% plummet in the second.

“Due to a decrease in inventory of end products at cutters and polishers, as well as at retailers as demand for diamond jewelry gradually recovered, the demand for rough diamonds has been improving since August,” the miner said.

Easing of coronavirus-related restrictions and increased online shopping supported a modest rebound in diamond-jewelry sales in the US and China in the past two to three months, Alrosa explained. This influenced jewelers to restock ahead of the fourth-quarter holiday season, while diamond manufacturers in India raised production following a long period of inactivity that lasted until August, the company noted. Supply shortages emerged in some polished categories, it added.

Alrosa lowered rough prices in August due to the improvement in the balance of supply and demand. Its rough prices decreased 7% on a like-for-like basis versus the previous quarter, and were down 13% since the start of 2020, the company reported. The average selling price increased 17% year on year to $110 per carat, while rough-sales volume fell 21% year on year to 5 million carats.

“The diamond industry began to show signs of improvement,” Alrosa continued. “It is, however, too early to talk about a full recovery before we see the year’s key figures — the US holiday-season sales.”

Polished revenues more than tripled to $35.6 million from $9.6 million a year earlier, reflecting the acquisition of diamond manufacturer Kristall in late 2019. Total diamond sales fell 4% to $588.5 million.

Production fell 24% to 9.2 million carats, resulting in the company’s rough inventories growing 41% year on year to 30.6 million carats as of September 30. Rough inventories rose 16% compared with the end of the previous quarter.

In the first nine months of the year, rough sales dropped 37% to $1.51 billion, while polished revenue jumped 93% to $71.4 million. Rough production decreased 23% to 22.9 million carats.’

Source – Rapaport