ALROSA Diamond Demand Down in March – Q1 Still Positive

Rough Market
03/04/2018 13:34

In an article published by Interfax Alrosa’s Vice President Yuri Okoyemov stated seasonal factors had affected demand for rough diamonds in March, which were slightly down compared to January-February.  "But the results of the trading session in March are good; Q1 on the whole can be given a positive assessment," he said. "Generally the forecast for the year is good at the moment; we are expecting stable demand and prices, with seasonal variations."

"Alrosa actively sold rough diamonds in Q1 and was close to the average normalized level. Various fluctuations in stock level are possible by the end of the year, driven by seasonal changes in production," Okoyemov said. The miner's average normalized stock level is between 13 to 14 million carats. This assessment was conducted by UBS, following a meeting with Alrosa representatives. Alrosa does not comment on the stock level during the year. The normalized level is slightly higher than technical inventory, (rough diamonds in the production chain from extraction to sale, as opposed to rough diamond prepared for sale), at around 12 million carats. According to the company’s management, Alrosa had stocks of 18.2 million carats at the start of 2018.

Alrosa has said that in January-February 2018, rough and polished diamond sales amounted to US$1.046 billion. Rough diamonds were sold for US$1.032 billion. The January sales were up 38% y-on-y and February sales grew 35%. The growth was driven by positive trends in the major sales markets backed by good retail sales results in 2017, which included the Christmas season, and growing polished diamond prices in January. The diamond miner's CFO, Andrei Flippovsky, has said Alrosa took advantage of a good market situation at the start of the year to sell some of its diamond stocks. "The January-February revenue growth was largely driven by higher sales volumes," he said, without saying how much of the inventory was sold.

Alrosa could in a favorable market situation sell at least 40 million carats of rough diamonds this year - more than the 36.6 million carats they expect to mine. Those sales would be level with 2017 and 2016 figures. The conservative sales scenario is 37.3 million carats, which Alrosa wrote into its annual budget in October.