ALROSA Cut Rough Diamond Prices By 2-3%

Moscow: ALROSA reduced diamond prices to long-term customers by 2-3 percent during the trading session in May, according to the representative of the Indian diamantaire Rosy Blue in Russia Ashot Badalyan cited by Interfax.

The required level of procurement (selection limit) remained at the same 90 percent, customers may defer only 10% of their monthly norm of diamond purchases, he said.

This is the second price reduction made by ALROSA this year, the first half of which saw a decline in diamond demand. In February, ALROSA lowered prices by 3 percent. At the same time, the company has tightened its customer discipline, raising the selection limit from 70 to 90 percent.

“ALROSA’s decision is justified and dictated by market conditions. I cannot say that in April the demand for diamonds revived, but in May there were positive signs,” – said Badalyan.

During the trading session on May 13, the new president of ALROSA Andrei Zharkov held a meeting with long-term customers. While at a meeting, according to ALROSA, Zharkov noted that long-term contracts will remain the basis of the sales policy of the company. “There will be no change in distribution policy. ALROSA continues to follow its course, we are satisfied with everything,” – says Badalyan. “It was an introductory meeting, an exchange of views. It was interesting to everyone and was held in a positive way.”

He didn’t rule out that some customers of ALROSA argued for price reduction because of difficult market conditions.

Last week, Sberbank CIB experts said the reduction in diamond prices is possible in May. Diamond markets are under pressure, and De Beers had to reduce diamond prices by another 3 percent, or by 5-6 percent in total since the beginning of the year. ALROSA will probably follow the same path, though the impact of price reduction could be offset by improving the range of goods for sale, as it was in the 1st quarter of 2015, analysts say.

“Long-term indicators – retail sales of jewellery, real estate prices in China, the relative stock performance of luxury manufacturers is still an evidence of weak demand in the low season from April to July”, – analysts of Sberbank CIB said.

Finmarket reminded that despite the slowdown of the diamond market in January-April, ALROSA has not yet changed its positive outlook for price growth of 3 percent to the end of 2015 as compared to January this year. “The company expects the improvement of market conditions in 2015 due to the economic development of key markets for diamond jewelry – the US, China and India,” – ALROSA reported a month ago.

ALROSA has 48 long-term customers accounting for about 70 percent of sales for Russian diamond monopoly. The list includes 16 Belgian, 12 Indian, 10 Russian, five Chinese, four Israeli and one Belarussian company.