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Alrosa Raises Prices Amid Supply Shortages

Jan 30, 2022 10:21 AM   By Joshua Freedman
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Alrosa increased rough prices by around 10% at its January trading session as supply gaps widened, customers of the Russian miner told Rapaport News.

“The industry, especially manufacturers, made a very decent profit in 2021, so they are in a good mood to continue the same volume of business in 2022,” a dealer said Thursday on condition of anonymity. “There is [also] a shortage of rough in the market. So each manufacturer is chasing rough.”

Price rose by around 12% to 18% in the smaller, lower-value goods, reflecting buoyant US consumer sales in the relevant polished categories during the holidays, the insider said. For higher-value items, the hike was approximately 5% to 7%. The average jump was 8% to 10%, buyers noted.

The company was unable to meet manufacturers’ strong demand because of limitations on production and low inventories, the traders explained. Supply volumes were up to 30% less than customers’ contracted allocations for the cheaper segments, and around 15% to 20% below for the more expensive items, one of the sources noted.

The company told customers it would offer them a second round of goods to help fill the shortfall, though buyers were unsure how Alrosa would be able to provide those diamonds. The available rough was snapped up quickly at the first round, they said.

The sale, which took place last week, was Alrosa’s first under a new long-term supply agreement that went into effect at the start of 2022. The price adjustments were similar to those De Beers implemented at its January sight, which saw sharper inclines in the smaller goods and more modest hikes in the large stones.

“Alrosa ensures that its pricing reflects the current market situation and aims to equilibrate the market,” a spokesperson for the miner said. “All our long-term clients have an opportunity to purchase goods equivalent to the assortment indicated in their contracts. However, it is important to note that currently, in the absence of buffer reserves, our supply matrix mirrors the run-of-mine mix. Together with the seasonality of mining operations, this may result in some assortment volatility, although this will not be significant.”

The company will continue to offer clients all the rough that’s available, “using extra rounds and spot sessions to supply goods on top of contracted volumes,” the spokesperson added.

Image: Rough diamonds. (Alrosa)
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Tags: Alrosa, Joshua Freedman, manufacturers, Manufacturing, prices, rough, rough market, rough prices, Russia, supply
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