'Solid' Demand, Limited Supply at Alrosa Sale

RAPAPORT... Alrosa saw steady sales in October as robust preholiday rough demand coincided with supply shortages.The miner sold $308 million in diamonds during the month, a drop of less than 1% versus a year earlier, the company reported Wednesday. The figure was 3% higher than in September.Rough revenues fell 2% year on year to $293 million, while sales in the polished division jumped 40% to $15 million. Rough sales encompass the company's monthly trading sessions for contract clients, as well as tenders and auctions of 10.8-carat stones and larger.Alrosa's inventories were significantly higher a year ago, as stockpiles had built up during the 2020 Covid-19 slowdown. This enabled the company to sell in large quantities when the market rebounded in the final months of the year.However, global diamond production is currently around 20% lower than before the pandemic, while rough demand is "solid," Alrosa pointed out. October is a seasonally busy period in the rough market, because Indian manufacturers focus on cutting and polishing goods for the US holidays before the Diwali break."In the past few months, rough diamonds have been in short supply amid the structural cuts in diamond production," said Alrosa deputy CEO Evgeny Agureev. "As end consumer demand for natural-diamond jewelry remains high, Alrosa aims to gradually restore the supply-and-demand balance, despite the limited capacities to increase production."The company's diamond revenues skyrocketed 90% year on year to $3.58 billion in the first 10 months of the year, reflecting the recovery from last year's downturn. Rough sales rose by the same percentage to $3.43 billion, with polished up 89% at $155 million.The volume of rough diamonds in Alrosa's safes plummeted 72% year on year as of September 30, according to the miner's third-quarter operating results.Image: Alrosa's Arkhangelsky open-pit mine. (Alrosa)