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ALROSA Inventories Rise As H1 Rough Diamond Sales Drop 32% To $1.78B

ALROSA reported that its 2019 second quarter rough diamond sales of $796 million were down 25 percent in a year-on-year comparison, while six-month sales, at $1.78 billion, were down 32 percent year-on-year.

Average realised prices for gem-quality diamonds during the period of $130 per carat, were down 21 percent in a year-on-year comparison. ALROSA attributed this to a return to normal demand for small diamonds after a demand surge at the beginning of the year as manufacturers replenished stocks.

In volume terms, gem-quality rough diamond sales of 6 million carats during the period were also down 8 percent year-on-year. The company attributed this to declining demand due to excessive stocking of rough and polished diamonds by cutters and retailers, and continued difficulties faced by India's cutting business in securing affordable financing.

It added that ongoing consolidation in the jewellery sector and growth in jewellery sales through on-line channels in the US have resulted in a non-recurrent reduction in polished diamond stocks across the retail sector as businesses embrace more efficient stock management practices, which is in turn impacted rough diamonds purchases by the mid-stream.

As a result of these sales reduction, ALROSA said its rough diamond inventories rose 36 percent year-on-year to 15.9 million carats.

ALROSA’s second-quarter production grew 14 percent year-on-year to 9.7 million carats. Six-month production of 17.6 million carats was also up 10 percent year-on-year.

Reviewing the global diamond market, ALROSA said that the first six months of 2019 saw weak activity in all segments. The key jewellery markets registered a decline in demand amid global macroeconomic uncertainty due to trade tensions between the US and China and the depreciation of the Chinese yuan against the US dollar, which reduced the purchasing power of Chinese consumers and tourists.

Currently, demand from jewellery consumers remains stable, which bodes well for renewed activity and higher demand for rough diamonds closer to the end of Q3 in the run-up to 2019-2020 Christmas sales season.

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