Rough diamond production has seen its steepest rise in prices since 2018. The Russian miner Alrosa explains that scarcities of diamond material and covid have prevented them from meeting the strong demand from their clientele. Last Friday (10/15/21) Alrosa's rough price index, which does valuations yearly, jumped a whopping 22% year after year in the third quarter and increased an additional 10% in the last three months.
The diamond market has seen considerable instability due to the covid crisis. However, it should be noted that 2021 sales are well above that of 2020, during the beginning of the pandemic. The total revenue generated by diamond sales reached 59% year on year to $938.1 million for the quarter. With regards to rough diamond sales, it increased 63% to $903.8 million while simultaneously dropping 10% to $99 per carat.
Jewelry Demand
According to one Alrosa spokesperson, “jewelry demand is strong in all the key markets.” And that, "at the same time, rough-diamond stocks at miners are at minimal levels, as supply structurally dropped.” After the initial covid scare, consumer confidence steadily climbed as the rough diamond market began to recover during the third quarter of 2020. Subsequently, this led to a stronger than expected holiday season with diamond dealers and retailers buying. The result of this buying frenzy led to miners with their inventory depleted. Furthermore, this lower availability of goods contributed to a slow down in sales in the third quarter with respect to the second quarter.
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.
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