|
|
Russia
By Anastasia Serdyukova
The demand for both rough and polished diamonds is growing, allowing a slight increase in prices. Yet the rise is treated with cautious optimism. Market participants don’t expect the rally of early 2012 to repeat because companies are not inclined to add to their inventory. Russia’s largest diamond miner ALROSA increased its prices by 1.2 percent on average since February. “We corrected the prices in different categories based on demand,” said Jane Kozenko, company spokesperson. “The prices were increased for the medium segment of the assortment, and the prices of small diamonds and gems over 1 carat moved slightly down.” The miner said strongest demand is for rough in lower colors and piquéd stones. ALROSA sales in January and February were larger in volume than for the same months of 2012, but the prices were slightly lower. Buyers are more cautious year on year and they are conservative about their stock levels and are watching them closely. “We don’t see any of the speculation in the market at the moment that we saw in 2012, although it may still occur,” said Kozenko. Despite the slump in sales in the third quarter of 2012, ALROSA ended the year with an overall 10 percent increase in revenue, which doesn’t include results from the company’s subsidiaries. For the year as a whole, ALROSA’s revenue grew from $3.845 billion in 2011 to $4.227 billion in 2012 and its net profit increased 34.3 percent from $964 million to $1.29 billion. The company sold $1.49 billion worth of rough domestically within Russia, less than the $1.537 billion in domestic sales in 2011, and its sales to foreign companies increased from $2.308 billion in 2011 to $2.735 billion in 2012.
Overall demand for polished is growing and the market is accepting the higher prices much more willingly, according to Nikolay Afanasiev, the head of sales at Kristall Smolensk, Russia’s largest diamond manufacturer. He said the company increased its prices by 3.5 percent to 4 percent on average so far in 2012. Afanasiev said that the market is more balanced than it was a year ago and is unlikely to see many fluctuations in 2012. Kristall also signed a new two-year agreement with ALROSA for its supply of diamonds. The previous agreement expired in 2012. The companies had been negotiating the assortment that the manufacturer would get under the terms of the contract. Maksim Shkadov, Kristall director, said ALROSA took into consideration its wishes for the rough assortment that would correspond to the company’s niche. Russian companies try to avoid working with low-quality and small rough because polishing it is unprofitable in the country. The miner had to re-sign most of its contracts in the past six months as their expiration dates approached.
March is the second best month after December for jewelry sales in Russia, thanks to International Women’s Day, a traditional gift-giving holiday. In 2013, companies targeting low-end mass market said the sales leading up to the holiday were lower than in 2012, while companies working in high-end jewelry reported good results. When it comes to inexpensive diamond jewelry, consumers are willing to accept lower characteristics for the sake of size. “The rings with J, SI3 stones are selling well because of their low price,” said Ekaterina Shvetsova from Maxim, jewelry maker and manufacturer. Most diamond items sold were within the $2,000 retail price. There are also those who can afford a better cut. “People are tired of the Chinese cut with 17 facets and prefer the traditional 57-facet stones,” said Roman Vorobyev from Kostroma-based Unigold. Outside of that higher end, most people chose less expensive items with semiprecious stones that are priced in the $1,000 range. In terms of design, buyers prefer lines and geometrical forms over the flower-shaped jewelry that was popular in previous years. Companies that sell high-end jewelry said that March sales were traditionally good. “Russians prefer buying jewelry based on the maximum amount they can afford at the moment, which makes it a market with many sales opportunities,” said Yoka Iizuka, a designer who works in Russia and Israel. Jewelers noted that clients are becoming pickier, looking for designs that are a bit more surprising and different, and that the general trend is the bigger, the better. Jewelry with either one big precious gem or many small diamonds of classic designs are popular. “In Russia, most people are looking for something sparkling and big,” said Russian designer Ilgiz Fazulzyanov.Russian Wins in Hong KongFazulzyanov won the title “Champion of the Champions” at the International Jewellery Design Excellence Award 2013 competition at the Hong Kong International Jewellery Show for the second year in a row. His Butterflies ring and earring collection competed against 187 entries from 28 countries. The collection was produced using his special technique of painting on gold. Article from the Rapaport Magazine - April 2013. To subscribe click here.
|
|
|
|