Industry News by Nemesis

ALROSA Continued to Keep Prices and Purchasing Limit Flat During Trading Session in June

June 29, 2016

ALROSA left its prices and monthly purchasing limit intact for long-term customers during the June trading session, as Interfax was informed by the representatives of the diamond miner’s two counterparties.
 

“In terms of price, ALROSA is introducing slight corrections doing fine-tuning – raising prices for some categories of rough and decreasing for others. In principle, prices are kept at the previous month's level,” Interfax was told by Nikolay Afanasyev, Sales and Marketing Deputy General Manager of Smolensk-based Kristall. This information was confirmed by a representative of another long-term customer of ALROSA.
 

The mandatory purchasing limit for customers remained at 70% (which means that clients can refuse to purchase no more than 30% of the monthly amount of their contract), said Nikolay Afanasyev. The last time the limit was changed was in January, when it was set at 50%.
Prices for rough diamonds from ALROSA have remained virtually unchanged during the first half of the year, although in April customers drew attention to an average price correction of 1%, mainly for large-size goods in the range of 5 to 10 carats.

 

In the course of 5 months of this year, “price fluctuations” reached about 2% due to price rebalancing within the same index, Andrey Zharkov said, explaining that “prices could go down by 2% and then get slightly levelled.”
 

According to a statement by Andrey Zharkov, ALROSA expects that prices for its goods will be stable throughout the second half of the year. The budget of ALROSA for 2016 suggests a possibility of reducing the cost of rough.
 

“If your goods are selling well and have buyers, why cut prices. There is no hype, but there is no pessimism either. The market is quite neutrally set. There is also demand, within reasonable limits. No one is going to jump into a whirlpool and nobody should expect this,” said one of the clients of ALROSA.
 

ALROSA held its trading session (viewing rough diamonds and signing binding contracts) on June 14-17, 2016. The rough put up for sale was from ALROSA, as well as from its subsidiaries ALROSA-Nyurba and Severalmaz (the latter’s rough is usually noted for lower quality). Rough diamonds extracted on placers by ALROSA’s subsidiaries Almazy Anabara and Nizhne-Lenskoye, which sold their last-year stocks in February and April this year, will be once again on sale only in September. The company does not comment on the details of its trading sessions.
 

JCK Las Vegas 2016 (held on June 3-6) “was in line with expectations,” said Nikolay Afanasev. One-carat stones were the most sought after. “Larger and more expensive stones from 3 carats onwards did not enjoy the same strong demand being under pressure. Demand for one-caraters, medium and small goods was normal,” Kristall’s deputy general manager said.
 

Demand for different categories of polished diamonds only indirectly affects pricing policies of diamond mining companies, he said adding that ALROSA and De Beers are primarily oriented to that product mix, which they are used to sell.
 

Prices asked at the June sight of De Beers have also been stable, according to Rapaport. De Beers sold boxes at mid-single-digit premiums, reflecting concerns that the rough diamond market does not follow the weakening of demand for diamonds.
 

The sight held by De Beers in June yielded $ 560 million, the company said on Tuesday, while totally De Beers raked in about $ 3 billion from its sales in the course of 6 months of this year.

 

ALROSA ceased providing sales value data since May of this year due to tighter access to information on the eve of possible SPO. According to market sources, ALROSA’s rough sales in the course of four months reached at least $ 1.5 billion.

 

Source: Rough&Polished

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