A delegation of ALROSA’s senior management, led by CEO Sergey Ivanov, met with representatives of the industry’s largest banks and non-bank financial institutions to discuss the latest trends and developments in the diamond industry as part of a workshop hosted by the Company. This was the first time ever that ALROSA held such a meet.

Present at the event, which took place in Moscow on December 6, were delegates from the State Bank of India, NBF, ABN AMRO, and representatives of the DelGatto and Channel finance funds.

Elaborating on the aim of the workshop, Sergey Ivanov, ALROSA’s CEO said, “Changes in the rough and polished diamond industry reflect global transformations, ranging from shifts in consumer behaviour to tighter financing requirements. (We discussed) …key factors behind the weaker diamond market environment in 2019 and steps that need to be taken to shore up market stability in the long term.”

Ivanov noted that the meeting “generated many useful insights”, adding that since transparency had become “one of the key drivers behind market efficiency” such meetings with the financial institutions would now be held “on a regular basis”.

In its presentation, ALROSA stated that the rough and polished diamond market is starting to show the first signs of stabilisation with some improvement in global diamond jewellery demand, primarily thanks to US consumers. The Company said that its data also shows that in October and November prices for a variety of diamond products edged higher, with prospects for destocking now more visible.

The participants also agreed that a more accurate assessment of the industry can only be made based on sales volumes in the festive winter season, “as they will show if the current upward trend is here to stay”.

The banks acknowledged the efficiency of the measures ALROSA had taken to support the market, above all the reduction in diamond sales volumes. They believe that the “price over volume” strategy chosen by diamond producers has helped the cutting segment to “digest the overstocking” amid a funding crunch in the midstream segment in India, which is home to more than 90% of all cutters, ALROSA reported.

Other support that ALROSA provided to its customers this year, such as the gradual lowering of the mandatory amount of rough diamonds required to be bought during a trading session, was also welcomed. The banks say that the flexible customer approach also enables the market, and notably the midstream, to continue operating in a tough environment.

Another conclusion reached by the workshop’s participants was that the existing turmoil helps to “sanitise” the market, pushing out players that never invested in business efficiency or resilience and prioritised short-term profits instead. “The general opinion is that the midstream segment is forced into a transformation. Industry players need to evolve into more transparent and responsible businesses, as it will help them to secure bank loans among other things,” ALROSA said.

The banks also highlighted the importance of marketing initiatives, saying that market growth can only be driven by stronger consumer demand for diamond jewellery.