Alrosa Finishes Year Strong, Rough Diamond Sales Up 5% To $4.4B in 2018

Rough Market
13/01/2019 17:50

Alrosa finished the year with a 6% increase in rough and polished diamond sales after a strong December in which the Russian miner's rough sales rose 44% year-over-year to $324 million from $228 million, which was also good for a 23% rise over November. The company sold $5 million in polished diamonds in December.

Total rough sales for the year increased by 5% to $4.4 billion. Adding $95.3 million from its polished sales (-2%), Alrosa's overall sales reached $4.5 billion for the year, virtually equivalent to its overall sales in 2016. The sales increase was driven by "high demand for rough diamonds and positive price dynamics in the first half of the year," said Evgeny Agureev, Member of the Management Board, Director of the United Sales Organization at Alrosa. He adds that "market demand was strong in all rough diamond categories, and the traditional slowdown in demand in the second quarter due to seasonality was not registered this year."

Alrosa managed to increase its overall sales despite the deterioration of the market for low-priced goods in the second half of the year due to a "weakening of the global market situation", the traditional slowdown during the summer months ("seasonality) and "destocking at a number of Indian midstream companies." Agureev adds, "At the same time, the company was actively engaged in optimizing its stocks, which made it possible to increase sales in physical terms, despite a decline in production in 2018 by 8% to 36.6 million carats.”

He attributed the 20% increase in sales from November to December to Alrosa's "flexible pricing policy against the background of seasonal renewed demand and replenishment of stocks by the companies in the cutting sector, which took advantage of the pricing environment." He concludes by noting that, "Despite the cooling of the market in the second half of 2018, we expect that the final customers' demand will remain at least stable.”.