RAPAPORT…
ALROSA, Russia’s largest diamond miner, says rough prices
are undergoing a certain correction, but the overall demand for rough is
stable. The company estimates its total rough and polished sales in 2011 will
reach $5 billion, with the volume for the first eight months of 2011 at $3.15
billion.
Market participants say there’s been a decrease in the price
of so-called Indian rough, the category that had increased the most in recent
months. As for other rough categories, demand remains strong, especially for
high-quality stones. Russian companies, ALROSA’s biggest customers,
characterize the prices as “high” and say there were no price declines in
September — this despite the fact that “ALROSA’s prices are on average 10
percent to 15 percent higher than in the free market,” said Valery Morozov, the
director general of Ruis Diamond.
Market participants are concerned over sporadic decreases in
rough diamond prices. “Some dealers have stocked up on rough and are nervous,”
said Nikolay Afanasiev, sales director of Kristall Smolensk. “The decrease in
prices results from some companies having to sell off stock to repay short-term
loans to banks,” said Alexander Maksimov, the director of Yakutia Diamond
Company.
But there’s also concern about where prices will go next,
especially since market activity seems to be slowing down and financial markets
in Europe and the U.S. continue to
appear unstable. “There’s hope that the prices in October will remain at the
same level,” said Morozov. “Stability is the most important thing for us.”
Polished Tender
In its first tender for polished diamonds, Kristall Smolensk
sold 48 stones, each weighing more than 2 carats, for $3.9 million. The gems,
said to be of very high color and clarity, included fancy shapes and colors.
“We see a deficit of rough with these characteristics and this leads to a
deficit of polished stones,” said Afanasiev. He said the selling price exceeded
the starting price by 10 percent to 15 percent, and that more than 80 percent
of the offering was sold. The company is planning to hold such tenders
regularly, with the next one scheduled for the end of October.
Caution Prevails
Following their rise over the summer, polished prices stopped
their climb in early September and even fell slightly in some categories.
Polished sales also have slowed down because Russian companies, who sell
abroad, were cautious about taking any action before the Hong Kong show.
“Everyone is waiting to see which way the pendulum will swing,” said Morozov.
Yet most companies are not keen on bringing the prices down. Kristall Smolensk
said their prices would increase up to 3 percent on average in September.
“There are not enough good diamonds in the market,” said Afanasiev.
Sales inside Russia were also stagnant in the beginning of
September. However, a number of companies reported good sales at the Junwex
show in Moscow in September, the biggest show of the season. Stones between .30
carats and .5 carats in G to I and VVS2 to VS2 were selling the best. There was
also an increased demand for yellow stones of J to L color, if they have good
clarity and are well cut, with pears being the most popular shape in this
category. “More yellow and brown stones are on display because more of this
rough has been sold recently by Almazy Anabara and Nizhne-Lenskoe, who mine
these stones,” said Yuri Shelementiev from Moscow State University Gemological
Center.
Bargain Shoppers
The other factor driving demand is the price. “People hear
about the unstable financial situation worldwide and they are unwilling to pay
much money,” said Irakly Aneli, director of Nevsky Diamond. As a “bargain buy”
for its clients, the company offered what it calls “dalmatine” stones: gems of
SI1 to SI3 quality in which visible inclusions form unique patterns. Aneli said
the stones are ten times cheaper than VVS gems of the same color and size, but
they are shiny, have good color characteristics and no cracks.
Companies also are offering a wide variety of certified
diamonds, which can be purchased by individual buyers. Most stones were .30
carats up to 2 carats. “It’s too risky to make jewelry items with big stones
because people are very choosy when it comes to the design. But certified loose
stones are selling well,” said Elena Galkina, director general of Russian
Diamond House, a manufacturer and jewelry maker.
Jewelers at the Junwex Moscow show, which had more than 700
participants this year, said sales were better than expected, although buyers
were looking for cheaper options. “People are psychologically unready to buy at
these new prices after gold and diamonds surged this summer. The higher prices
for more expensive items that contain diamonds are accepted more readily than
higher prices for items without gems,” said Svetlana Rakhmanina from Rifesta,
which sells jewelry starting at around $1,000. Most companies presented new
collections, not only in recognition of the new season, but also to divert
attention from how much the prices have gone up. “We are using more
semiprecious stones as well as sapphires and rubies because items made solely
with diamonds are more expensive,” said Galkina.
The Marketplace
- Diamonds of .30 to 1 carat with average characteristics
are in greatest demand. - Retail prices for the most popular certified diamonds sold
at Junwex were as follows: .30 carat F, VVS1 and VVS2 are priced at $5,900 a
carat; .50 carat F, VVS1 and VVS2 at $9,800 a carat; .70 carat J, VS1 and VS2
at $5,500 a carat and 1-carat
pears in J, SI1 at $6,500.
