Alrosa expects supply and demand for rough and polished diamonds to even out over the next few months as inventory levels in the midstream fall.
Significant demand for jewelry products and a drop in diamond-mining capacity — of up to 20% of 2018-19 figures — will support price growth, Alrosa’s head of corporate finance, Sergey Takhiev, said during a recent meeting with journalists.
“The rapid development of the online jewelry trade has allowed jewelers and retailers to structurally reduce their inventory needs,” added Takhiev. “As a result, the process of normalizing inventories took a long time. However, the decline in production observed in recent years due to the natural depletion of the global resource base and the growing capacity of the luxury goods and jewelry market, in particular, are factors that will ensure growth in prices for diamond products in the long term.”
Alfa-Bank analyst Yulia Tolstykh, also present at the meeting, observed that the threat from lab-grown diamonds had weakened as prices for synthetics decreased. Natural stones could see a further 50% recovery as the pressure in prices caused by inventory surplus will balance out within the next three to four months, Tolstykh estimated. She also noted growing demand from Chinese consumers who were shopping outside the mainland to benefit from cheaper prices in other countries, especially Japan.
“The difference in prices (20-30% more expensive in China), assortment, novelty, authenticity and other factors have led to the fact that Chinese demand for luxury items has shifted geographically to other regions, while remaining relatively high,” Tolstykh said. “At the same time, the potential for growth in demand for diamond jewelry in China itself remains incredibly high.”
Image: Rough diamonds. (Alrosa)
