Rough Shortfalls Restrict Alrosa Revenue

RAPAPORT… Alrosa saw stunted sales in January as supply limitations prevented the Russian miner from meeting buoyant rough demand.

Diamond revenues fell 24% year on year to $325 million for the month, the company reported Thursday. Rough sales dropped 25% to $315 million, while polished grew 11% to $10 million. The total was higher than December 2021’s $254 million but lower than November’s $334 million.

“January saw continuing strong demand for diamonds from midstream companies seeking to stock up after a successful holiday season sales across all the key markets,” said Alrosa deputy CEO Evgeny Agureev. “At the same time, sales have been capped by current production levels, similar to the situation seen in the second half of 2021.”

Revenue per carat increased “considerably” year on year, following changes in the sales mix and growth in like-for-like rough prices, Agureev explained. The company raised prices by between 5% and 18% at the month’s trading season, customers told Rapaport News — indicating sales volumes were significantly lower than in 2021.

The dynamic reflects rampant jewelry demand at the consumer level and a shortage of rough. Many miners, including Alrosa, have experienced limited production and a lack of inventory, leading to jumps in rough prices.

On Wednesday, Alrosa said it would allow contract customers to bring their monthly supply allocations forward, enabling them to access the rough they need.


Image: Trucks at Alrosa’s Verkhne-Munskoye mine in Yakutia, Russia.
(Alrosa)