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Russia
By Svetlana Shelest
Russia’s mining giant ALROSA reported a 31 percent year-on-year increase in revenue in first quarter 2015, which totaled $1.3 billion, exceeding the company’s preliminary projection. Net profit in first quarter grew 3.7 times year-on-year and amounted to $402 million. “First quarter 2015 results were mainly driven by a favorable FX market environment,”explained Andrey Zharkov, ALROSA’s recently elected new president. Igor Kulichik, the company’s chief financial officer (CFO), expanded upon Zharkov’s comment, saying that it was mainly “due to the ruble devaluation vis-à-vis the U.S. dollar” that the miner’s “sales and margins had been record high.” However, he continued, “the diamond market in first quarter 2015 was less active than in first quarter 2014 and less than we had expected originally, which resulted in the company reducing the prices by 6 percent year to date.” According to ALROSA’s assessments, the reduced activity in the diamond market year to date was due to a drop in demand from Indian cutters and polishers, who chose to carry out their sales through reducing stock. However, Kulichik emphasized that the miner believes that “the fluctuations or volatility that we saw in first quarter and the beginning of second quarter is now over.” Furthermore, he does not expect “any major step down” in the rough diamond pricing until the end of 2015. “The fundamental factors remain positive in terms of demand for diamond jewelry,” concluded Zharkov.
“A friend in May is a friend all the way,” became the unofficial — and oft-repeated — slogan of the Junwex May show, New Russian Style. This playful rendering of the proverb mentioned at the opening of the show concisely captured the current mood among Russia’s jewelers this year. As the market enters the traditionally “slow” summer season, it is working hard to stabilize after the serious impact from the currency crisis in 2014 and the effects of the economic sanctions. Loyalty on the part of both buyers and sellers is especially valued by the professional community.
This summer, jewelers appeared to be placing their bets on affordability, sophisticated design and versatility. One trend they appear to favor are the light brown and brown diamonds cast in settings of attractive designs featuring coordinating or matching colors. Brillianty Kostromy, a well-known Kostroma-based jewelry manufacturer, reported that the company’s new Cognac Collection featuring .30-carat to .49-carat brown diamonds was selling really well. Another approach that seemed to be trending was diamond pavé or scattered diamond melee in highly elaborate filigree designs with no single center diamond. Promoting value was still another attempt to deal with the challenge of people buying less jewelry. Estet, one of the biggest jewelry producers in Russia, introduced the Duet collection featuring rings made of two halves from different precious metals pavéd with melee of different colors. Depending on which side is face up, the ring gives the customer a “two-in-one” opportunity for the price of one. The collection also offers earrings and pendants with the same effect. It won the second prize in the Innovative Solutions and Ideas category at the show.
In the more traditional diamond jewelry segment, many agreed that H color SI1 clarity diamonds were most popular at the moment, representing the most competitive combination of price and quality. As for the weight, the most popular categories appeared to be up to .30 carat and over 1 carat. Viktor Tulupov is the director of the Yekaterinburg-based Tulupov Jewelry House, which won first prize in the Diamond Style category with a 3.58-carat, marquise-cut, D color, IF clarity ring and the Dream Time necklace, featuring an impressive 5.34-carat, pear-cut, D color, VVS1 clarity diamond. He noted, “There is demand for all categories of stones. It wouldn’t be quite right to say that there is one kind or type that is leading the sales. However, there is indeed an increased interest in diamonds from 1 carat and up today.”Article from the Rapaport Magazine - July 2015. To subscribe click here.
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