Alrosa reiterated its commitment to support its clients and the diamond industry at large by announcing a new set of unprecedented measures to offer additional flexibility.
The company continues to follow the real demand confirmed by its clients. For the trading session taking place from 27th to 31st of July, Alrosa decided not to set the mandatory buyout minimum requirements under long-term agreements that traditionally cover about 75% of its overall sales. Moreover, the clients have an option to defer some volumes from July to forthcoming sales periods of 2020. This provides flexibility to the diamond buyers and will help them to optimise their purchasing according to production and sales plans, the company said.
In April-June, Alrosa allowed its clients to defer initially allocated volumes to the later months of the year. As a result, the volumes allocated for the second half of 2020 grew by nearly one third from historical levels. Having considered the situation, Alrosa decided to reduce by 50% on average (in carats) mutual obligations for the seller to supply and for buyers to purchase rough diamonds starting from August.
“Jewellery sales show first signs of recovery after some counter-pandemic measures were lifted. However, most cutting and polishing facilities still operate at reduced capacity, while the polished diamonds demonstrate selective demand varying from segment to segment. That is why we decided not to set the mandatory purchase limit for the July session, allowing our clients to buy the goods they need now and to defer certain volumes to the consequent sessions of the year,” said Alrosa Deputy CEO Evgeny Agureev.
“Starting from the August session, monthly volumes to be purchased under long-term agreements will be reduced by 50% on average in carat terms. This decision reflects, among others, the fact that the production guidance for this year is lower by around a quarter as compared to the previous year. Nonetheless, after the allocation revision, our clients will be able to purchase additional volumes at auctions and tenders as well as request extra goods. This will allow them to replenish their inventories selectively, being more flexible when responding to the market demand.”
Credit: © Alrosa