Alrosa has reduced prices of rough diamonds at this month’s trading session in the wake of similar discounts by De Beers, market insiders told Rapaport News.
The Russian miner’s cuts averaged around 10%, the sources said Tuesday, with estimates ranging from 5% to 15%. Its price movements are harder to gauge than those of De Beers, as many industry players have stopped buying from the company since Western sanctions on Russia began in 2022. Alrosa did not respond to a request for comment.
The change narrows the price gap between Alrosa and the open market, which had reached 20% to 25% for some categories, manufacturers said. While prices have fallen at tenders and auctions, Alrosa had — like De Beers — maintained a strategy of limiting volume rather than lowering prices.
Executives at Alrosa, which tends to match the pricing policies of its main competitor, traveled to trading centers in September to inform customers that it did not envisage reducing prices for the time being. Doing so would risk flooding the market with goods amid an oversupply in many polished categories.
However, the situation has changed: The polished crisis has eased in the past month amid US holiday demand and a drop in production at Indian manufacturers over the extended Diwali period.
On Monday, De Beers sightholders turned up at the first day of the miner’s December contract sale to find prices were 10% to 15% lower than before, insiders reported. De Beers usually waits for the overall market to improve before making sharp price cuts. The company does not comment on its rough pricing at each sight, but a spokesperson said it had observed stabilization in polished prices and a reduction in inventories.
Alrosa immediately responded with its own reduction, though traders don’t expect the cut to stimulate wild demand this month. Many customers continue to avoid its rough because of Group of Seven (G7) import bans and reputational factors, and the goods are still more expensive than tender prices.
“Goods should sell, but I feel the discount is too far from reality,” said one manufacturing executive.
Alrosa anticipated this ongoing weak demand by securing a deal to sell inventory to Gokhran, the Russian state-owned gem depository, which traditionally offers the miner a backstop during downturns.
In addition, large volumes of rough sales from Angola are propping up inventories, making buyers cautious about further purchases, the same manufacturer said.
Last month, Alrosa CEO Pavel Marinychev said the company might suspend production of less profitable items, citing a “deep crisis” in the industry, Reuters reported. The miner’s revenue fell 5% year on year to RUB 179.47 billion ($2.01 billion) in the first six months of 2024.
Image: Rough diamonds. (Alrosa)
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