Alrosa's Sales Buoyed by Continued Strong Demand

RAPAPORT... Alrosa's sales jumped year on year in July amid steady consumer demand for diamond jewelry, even as revenue for the month was the lowest since the start of 2021.Diamond revenue surged to $334 million, up from $35.8 million a year earlier when the coronavirus pandemic stunted sales, the miner said Tuesday. Sales were also nearly double those of July 2019, when the company sold $170.5 million.However, the July total was lower than for any of the previous six months, reflecting inventory shortages. Last month, Alrosa purchased around 70% of rough available at a special tender by Gokhran - the Russian state gem and precious-metal depository - to supplement its stock.Jewelry appetite remained robust in July following a strong showing in the first half of 2021, Alrosa deputy CEO Evgeny Agureev noted. During those six months, demand in the US increased by an average of 35% over 2019 levels, while in China and Hong Kong, it grew by 15%."Heading into the second half of the year, the retailers note continued optimism among consumers and their increased interest in diamond jewelry," Agureev continued. "This continues to support strong demand for rough diamonds from the midstream, which faced supply shortages as early as May [and] June 2021, when miners saw their inventories drop to record-low levels."At its latest sale, Alrosa increased its rough-diamond prices by an average of around 7%, with steeper rises for sizes above 2 carats, market insiders told Rapaport News."At the moment, the pricing policy presents the only solution to balancing demand and supply," Agureev explained. "By early August, our rough-diamond prices have rebounded to the pre-crisis levels. As a responsible market player, Alrosa will seek to support the demand and supply balance by servicing the real demand only."Rough sales for July came to $318 million, compared with $22.7 million the year before. Polished revenue grew 14% to $15 million.For the first seven months of the year, diamond revenues soared to $2.67 billion from $1.03 billion in the same period of 2020. Rough sales were $2.55 billion, up from $978 million, while polished sales reached $122 million, versus $49 million the previous year.Image: Diamonds during polishing. (Alrosa)