By just about any measure - with the exception of last month - Alrosa's diamond sales in May 2020 scraped rock bottom as the Russian miner enabled its long-term clients to postpone their purchases in an attempt to lower the pressure on the market. Alrosa expects buying activity to improve in the middle of the third quarter.
Rough diamond sales in the month totaled $36.2 million, which is a significant improvement over the mere $13.1 million in rough sold in April, but falls 86% short of the $261.1 million sold in the same month last year. Polished diamond sales were $3.9 million, bringing their monthly total to $40.1 million. For the first five months of the year, Alrosa has achieved rough diamonds sales of $930.6 million, a 40% decline compared to the same period last year. None of the results, however, were unexpected: not only is market activity still subdued due to COVID-19, but Alrosa has also taken steps to restore balance to the market.
"Despite a noticeable increase compared to April ... sales in May were expectedly low, as Alrosa remain committed to its price over volume strategy, allowing the cutters, who are just resuming their work, to reduce the accumulated rough and polished diamond stock," said Evgeny Agureev, ALROSA Deputy CEO. "In May, our long-term clients, like earlier in April, were granted an opportunity to postpone the purchase under long-term agreements to a later period of the year. [We] kept the same approach for its June trading session. We believe that our approach to avoid putting pressure on the market will accelerate recovery of the market of supply and demand balance."
He added that Alrosa expects buying activity at the mid-stream to improve in the middle of the third quarter.