Alrosa Hikes Prices in Hot Rough Market

RAPAPORT… Alrosa lifted prices at its latest monthly contract sale as the rough market continued to see strong demand and limited supply.

“The increase was mainly in 4-grainers and above, and also more in the medium- to better-quality goods,” an Alrosa customer told Rapaport News Monday. “There…the increase was [around] 4% to 5%. But [for] minus-4-grainers, [there was] almost no increase, or maybe a very symbolic 1.5% to 2%.”

The rise was gentler than many manufacturers and dealers had expected. Earlier this month, De Beers increased prices by more than 5% in some categories at its June sight amid buoyant rough trading. Both miners’ contract clients are achieving premiums of up to 20% when they resell certain items on the secondary market, sources said.

Rough supply is low at present because Alrosa and De Beers depleted their inventories in the first quarter and have experienced production difficulties. At the same time, strong retail demand in the US and China is supporting the polished market. Alrosa has told customers it will only be able to offer limited goods over the coming months.

“The big question is [whether] the miners [can] keep their cool with the way the rough market is acting now,” another customer said, noting that he was pleased Alrosa didn’t implement the sharper price rise he had anticipated. “We’ve seen so often that if they go with the flow and they take the increases, which seems to be possible now, they’re going to be high and dry in September [and] October, when they have a lot of goods and they may not be able to sell [them] at the prices they want.”

An Alrosa spokesperson said the company was taking a “prudent” approach to sales and pricing and focusing on the “long-term health of the whole diamond pipeline.

“As…solid confirmed demand today meets limited rough supply, we believe that all industry participants should act responsibly in order to preserve cutters’ margins and effectiveness,” the spokesperson noted. “Though prices keep recovering…rough prices are still below the levels seen in [the] early 2010s, even in nominal terms.”

The miner is scheduled to release June sales data on July 9.

Update, June 28, 2021: This article has been updated with a comment from Alrosa.

Image: Rough diamonds ready for cutting and polishing. (Alrosa)