Alrosa has lowered rough diamond prices at this month’s trading session, following similar price reductions by De Beers, according to industry sources.
The Russian miner’s cuts averaged around 10%, with estimates ranging from 5% to 15%. However, Alrosa’s price movements are more difficult to track compared to De Beers due to many industry players ceasing purchases from the company after Western sanctions on Russia were implemented in 2022. Alrosa did not respond to requests for comment.
The price reduction narrows the gap between Alrosa’s prices and the open market, which had reached 20% to 25% for certain categories, manufacturers reported.
Although prices have fallen at tenders and auctions, Alrosa, like De Beers, had previously focused on limiting volume rather than reducing prices.
In September, Alrosa executives, who typically align their pricing strategy with De Beers, visited trading centers to inform customers that the company did not foresee price reductions at that time.
Reducing prices could flood the market with goods, especially amid an oversupply in many polished diamond categories.
However, the market dynamics have shifted. The polished diamond crisis has eased in the past month, driven by demand for US holiday season jewelry and reduced production from Indian manufacturers during the extended Diwali period.
On Monday, De Beers sightholders attending the first day of its December contract sale found that prices were 10% to 15% lower than previous sales, according to insiders.
De Beers typically waits for market conditions to stabilize before implementing significant price reductions.
Although the company does not publicly disclose rough diamond pricing, a spokesperson noted that polished prices had stabilized, and inventory levels had decreased.
In response to De Beers’ price cuts, Alrosa immediately reduced its own prices. However, traders do not expect this move to spark a surge in demand this month.
Many buyers continue to avoid Alrosa’s rough diamonds due to G7 import bans and reputational concerns. Additionally, Alrosa’s prices remain higher than those at tenders.
“One of the executives in the manufacturing sector stated, ‘The goods will sell, but the discount still doesn’t align with the market realities.’”
Alrosa had anticipated this ongoing weak demand, securing a deal to sell inventory to Gokhran, Russia’s state-owned gem depository, which traditionally provides a backstop during downturns.
Furthermore, large volumes of rough diamond sales from Angola have contributed to higher inventory levels, prompting buyers to be more cautious in their purchasing decisions.
In a statement last month, Alrosa’s CEO, Pavel Marinychev, noted that the company may consider suspending the production of less profitable diamonds, acknowledging the “deep crisis” facing the industry.
Alrosa’s revenue fell by 5% year-on-year, amounting to RUB 179.47 billion ($2.01 billion) during the first half of 2024.
