Alrosa Rough Prices Hit Three-Year High

Nyurbinsky open-pit mine in Yakutia, Russia

Alrosa’s rough-diamond prices have reached their highest level since late 2018, as scarcities have prevented the Russian miner from meeting strong demand.

The company’s rough-price index, which tracks like-for-like valuations, jumped 22% year on year in the third quarter and rose 10% versus the previous three months, it reported Friday.

While the diamond market’s recovery from the Covid-19 crisis eased during the period, sales were still well above 2020 figures. Total diamond revenue climbed 59% year on year to $938.1 million for the quarter, with rough sales gaining 63% to $903.8 million. The average selling price dropped 10% to $99 per carat.

“Jewelry demand is strong in all the key markets,” the company explained. “At the same time, rough-diamond stocks at miners are at minimal levels, as supply structurally dropped.”

The rough market began to recover in the third quarter of 2020 as consumer sentiment returned following the initial coronavirus-induced lockdowns. This led to a strong holiday season for retailers and a buoyant restocking period in the first quarter of 2021, leaving miners with minimal inventory from the second quarter onward.

This lower availability of goods contributed to a decline in sales in the third quarter relative to the second quarter, the miner pointed out.

The price index has advanced 25% since the beginning of the year, hitting a level the company last saw in the fourth quarter of 2018. Its stockpiles increased slightly to 8.6 million carats in the third quarter — up from an almost unprecedented low of 8.4 million carats in the second quarter — but were still down 72% year on year.

This also reflected a 5% year-on-year drop in production to 8.8 million carats. Although sales volume exceeded this, rising 83% to 9.2 million carats, inventories still grew because Alrosa was able to sell some 696,500 carats that it bought from Russian state gem depository Gokhran.

Meanwhile, sales from the miner’s polished-diamond division slipped 4% to $34.3 million.

In the first nine months of 2021, total diamond sales more than doubled to $3.27 billion versus $1.58 billion in the same period of 2020, reflecting the global market rebound. Rough revenues came to $3.13 billion, compared with $1.51 billion a year earlier.