Alrosa has canceled its next two sales and urged caution from buyers and suppliers amid a steep downturn in the diamond market.
The Russian miner informed Indiaâs Gem & Jewellery Export Promotion Council (GJEPC) of the decision in the past few days, citing low demand. The move follows the GJEPCâs recent call for rough producers to act responsibly.
âAlrosa has decided to temporarily halt the allocation of rough diamonds in September and October 2023,â the company said in a note to the GJEPC, seen by Rapaport News. âWe believe that this approach is going to have a stabilizing impact by strengthening the marketâs supply-and-demand balance. This will aid the prevention of overstocking, especially with manufacturers closed for Diwali.â
Alrosa has continued to sell despite being under US sanctions since the Ukraine war began in February. The companyâs revenue was broadly stable year on year at RUB 188.16 billion ($1.9 billion) in the first half of 2023.
Most of the rough goes to India, market insiders believe. That countryâs diamond trade has suffered a serious crisis because of weak US and Chinese demand and competition from lab-grown stones. Inventories have piled up as the sales slump has outpaced manufacturersâ production cuts, leading to falling prices.
The GJEPC wrote to diamond miners earlier this month, asking them to be âresponsibleâ when selling to prevent a worsening of the situation. In response, Alrosa said it âexpresses equal concern and strives to reverse the existing trend of diminishing demand.â
The Russian company said it would welcome a similar position from other industry players, such as miners, cutters and retailers, âon the matter of rough-diamond purchases and salesâ as a âreciprocal effort.â
The benefits of the minerâs decision should be visible in the market by the beginning of next year, it said in a separate statement Wednesday.
âAlrosa has always followed the practice of supporting market stability and leveling its volatility,â a spokesperson for the miner said. âOur solid and high-quality asset base and stable financial position allow us [to implement] such measures.â
By contrast, De Beers will continue to hold sights but take a âresponsible approachâ to sales, âjust as we have previously when faced with challenging industry conditions,â a spokesperson for the Anglo American unit said. The company, which is holding its September sight this week, has already allowed customers to defer up to half of rough purchases for the rest of 2023.
âWe will focus on additional supply flexibility as necessary to meet sightholdersâ evolving requirements,â the De Beers spokesperson added.
The news comes amid growing expectations for a Group of Seven (G7) ban on Russian diamonds, with an announcement likely in two to three weeks, Reuters reported last Friday, citing Belgian officials. The World Diamond Council (WDC) is also facilitating a proposal for keeping Russian and non-Russian diamonds separate.
Image: Rough diamonds. (Alrosa)