Alrosa, the world’s biggest diamond producer, reported that its proceeds from rough and polished diamond sales in Q3 came in at $589 million (a 6.8x increase quarter-on-quarter and down 4% year-on-year), including $553 million in revenue from rough diamond sales and $36 million in revenue from polished diamond sales. Alrosa’s sales for the nine-months ending 30th September, 2020, were down 35% to $1,580 million.
Alrosa said, “Due to a decrease in inventory of end products at cutters and polishers, as well as at retailers as demand for diamond jewelry gradually recovered, the demand for rough diamonds has been improving since August. Q3 diamond sales saw an 8x increase quarter-on-quarter reaching 5 million carats, including 4.1 million carats of gem-quality diamonds. However, January-September sales declined 40% to 15.1 million carats.
The company’s third-quarter rough diamond price index declined by 7% quarter-on-quarter, and was down 13% in the year to date.
In its diamond market overview, Alrosa noted that the relaxation of Covid-related restrictions and a shift in consumer behaviour towards online shopping, resulted in the gradual recovery of demand for diamond jewellery in the key US and China markets, which saw year-on-year growth of jewellery sales over the past two to three months. As consumer sentiment improved, jewelry businesses restocked before the festive season.
“India’s cutters and polishers, that were either closed until August or had underutilised capacity due to the Covid-19 pandemic, managed to gradually increase activity following the partial lifting of lockdown measures. Their diamond stocks have declined, nearing shortage in some product categories, which led to partial recovery of polished diamond prices,” Alrosa said.
The market saw the demand for rough diamonds rise by the end of August, with jewellery businesses stocking up before Christmas holidays. Alrosa decided to slightly adjust prices in order to satisfy the real demand while maintaining the profitability level required by the midstream.
The diamond industry began to show signs of improvement. It is, however, too early to talk about a full recovery before we see the year’s key figures – the USA holiday season sales.
Photo © Alrosa