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Russia
By Anastasia Serdyukova
ALROSA said demand for rough continued to increase in March, with the company’s long-term clients requesting additional volumes of stones. The company corrected some of the prices, depending on the demand in the market. “On average, the prices remained at the same level as in February,” said the company’s representative. The miner held a tender in Israel in March, during which it sold rough stones of 5 carats to 10 carats for over $1.5 million. “This rough was previously kept in stock because there was little interest for this assortment,” said the company’s representative. At the end of March, the company presented 121 diamonds over 10.8 carats for an auction in Israel, with the biggest stone weighing 80.5 carats. ALROSA also sold 240 diamonds of 10.8 carats and larger at its auction in Hong Kong, receiving around $18 million for the stones. The company said activity in the show was high and the increase in demand for diamonds has had a good effect on the demand for rough. “The demand is especially good for diamonds that can be made into polished of less than 1 carat,” said ALROSA’s representative.
Nikolay Afanasiev, the head of sales for Kristall Smolensk, said the Hong Kong show confirmed positive upward trends in the market, even though the growth is slower than manufacturers would like to see. “There is still resistance to the increase of prices,” said Afanasiev, noting sales were especially brisk for stones up to .40 carats in SI and lower clarity. “There is still a big gap between the prices for rough and the prices for polished,” said Valery Morozov, the director of Ruiz Diamonds. “Those who are buying rough are hoping for higher future prices,” said Afanasiev. Ekaterina Blinova, who is in charge of marketing at Zvyozdochka, an Arkhangelsk-based manufacturer, said that diamonds between .30 carats and .90 carats remain popular inside Russia, a wider range than previously, when demand stopped at .30 carats.
The turbulence caused by the crisis in Ukraine is worrying manufacturers. If broad trade sanctions are implemented against Russia, it will be bad for business. The country’s ruble currency has lost more than 10 percent against the dollar and the euro, which has a two-sided effect on the industry. Since Russian manufacturers export most of their goods, the change in the exchange rate is beneficial for them because their selling price is more valuable. But, when the companies buy raw materials, gold and other supplies in foreign currencies, the increase in the exchange has a negative effect on the price they pay. “We worry a lot, because the change of exchange rate makes raw materials more expensive because we pay in rubles, but the price is fixed in dollars,” said Blinova, whose company also produces jewelry.
Although Russia has its own diamond grading system, used when diamonds are sold domestically, the interest in Gemological Institute of America (GIA) certificates is strong and growing annually. Yulia Solodova, the head of Russia’s Gemological Institute, the only educational establishment that offers GIA programs in Russia, said she receives calls every week from people who want to get GIA certificates for diamonds. Talk about establishing a GIA laboratory in the country has circulated for years but it has never moved beyond talk. “If GIA came to Russia, it would be most welcome, as there are many manufacturers and dealers who would use its services,” said Afanasiev. Morozov said that a GIA lab in Russia would reduce expenses for companies because they could get rid of the intermediaries. “It’s practically impossible to send diamonds to New York for certification,” he said. He also said that the technologies for verification of synthetic diamonds used by GIA would be of value in Russia. Private individuals show more interest in GIA certificates as investment in diamonds increases. Legally, Russian customers can’t buy a loose polished diamond in Russia without a certificate. There is a difference between GIA and existing certification standards applied by Russian labs. “In order to guarantee global recognition, mobility and liquidity of a diamond as a treasury asset, our company sends all stones that we offer for investment purposes to get a GIA certificate, in addition to the ones given by Russian labs,” said Daria Arkhincheeva, chief executive officer (CEO) of Nurba Diamonds, which deals in diamonds as an alternative asset instrument for high-net-worth individuals globally. “Getting a GIA certificate for stones mined and polished in Russia is time consuming due to customs and the required regulatory procedures of taking stones abroad and bringing them back to Russia. This process can take up to two months in some cases,” Arkhincheeva said. “In my opinion, the opening of a GIA-level standards certification center in the Russian Federation would be a logical step, due to the increasing volume of stones mined and polished within the country.” GIA courses, however, are available in Russia at Gemological Institute. Solodova said that when the institute started in the early 1990s, GIA looked at the possibility of opening a lab in Russia, but it decided the domestic market was not yet ready.Article from the Rapaport Magazine - April 2014. To subscribe click here.
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