Alrosa sees diamond demand uptick in 2021

Members of the KP are expected to determine whether Russian diamonds should be declared conflict gems. (Photo: Dmitry Amelkin, Transformation Director of Alrosa’s Polishing Division. Courtesy of Alrosa | Twitter. )

Russia’s Alrosa (MCX:ALRS), the world’s top diamond producer by output, became on Thursday the latest industry actor to flag improvement in global demand for the precious rocks.

The state-owned miner said sales grew more than three fold in the fourth quarter of 2020 to 17 million carats, including 12.2 million carats of gem-quality diamonds.

Despite reduced output and lack of diamond trade in the first half of the year, the company managed to sell 32.1 million carats in 2020, mainly thanks to the seasonal uptick in the fourth quarter. Yet sales revenue for the year fell by 16% to $2.8 billion.

“By the end of the year, demand for rough diamonds was strong and stable, driven by a balanced sales policy of major diamond producers seeking to meet real demand,” Alrosa said.

The Russian government said last year it was considering buying some of Alrosa’s diamonds to support it.

“At the moment, the market conditions allow us not to consider this option for the company yet. But we understand that such an option is available in case there is a need for it,” Alrosa told Reuters on Thursday.

Price cuts

Like its peers, including Anglo American’s De Beers, Alrosa focused on a “price-over-volume” strategy in 2020. The move sought to reduce pile stocks in the cutting and polishing sector, the majority of which is located in India.

The two biggest producers have traditionally sought to keep any price cuts private to avoid ripple effects through the supply chain. Both Alrosa and De Beers, the world’s No.1 diamond miner by value, made an exception in 2020 to their usual sales rules in order to deal with the effects of covid-19 restrictions.

De Beers raised diamond prices in December for the first time since the global pandemic outbreak, signalling growing confidence in a rebound for the struggling industry.

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