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Diamond market rebound propels Alrosa's Q4 sales 45% up

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February 1
2:04 AM 2016

The world's largest producer of rough diamonds Alrosa PJSC has posted 45 percent growth in sales for the fourth quarter of 2015 as the recovery in the global markets taking place. The drop in diamond prices also led to surge in sales volume. The sales of gems were also encouraging during the fourth quarter.

The global prices of diamonds fell over 18 percent in 2015. The price fall in the global diamond market was worst since 2008. This situation forced DeBeers and Alrosa to reduce production and sales volume to support the falling prices. The output of rough diamonds fell by 26 percent to 8.61 million carats during the fourth quarter.

Russia's Alrosa recorded 7.1 million carats of gems sales the last three months of 2015. The third quarter's sales volume was 4.9 million carats for gems. Alrosa had to stockpile 58 percent of production level owing to low demand and weaker prices, as reported by Bloomberg. Alrosa's output fell 26 percent to 8.61 million carats, while output for 2015 full year rose to 38.3 million carats. The overall sales for the full year were 30 million carats. 

DeBeers has announced the sale of $540million of diamonds in the first sale of the year and this is twice the last year sale's level. Africa-focused Petra Diamonds says that diamond prices are bottoming out following the production cut by DeBeers and Alrosa. Petra Diamonds considers this situation is ideal for it to grow further in the market in next 12 months. 

The global markets are suffering slump in the commodities market as China's economy is slowing down. The dragon country is the largest consumer of commodities in the world. Falling in line of commodities market, diamond prices too turned weaker in 2015. The drop of 18 percent in diamond prices is the worst ever in seven years, according to Mining.

Alrosa is anticipating the sales of $3.5 billion for 2016 full year. The company is forecasting growth in demand this year. The production may grow 2.6 percent to 39 million carats in 2016. Alrosa recorded 17 percent growth in sales at $2.6 billion for nine months of 2015. Alrosa has decided to achieve design capacity of Mir underground mine in Yakutia region of Russia.

Mineweb reports that diamond industry is on recovery path. Oleg Petropavlovskiy, an analyst at BCS Global Markets, said: "The diamond industry has begun a recovery. With De Beers' sales also rebounding, we believe that the duopoly worked very well in the second half with large supply cuts and now sales will rebound. Alrosa to its list of most preferred shares."

Alrosa accounts for about one-third of the global diamond industry. Its sales fell 22 percent during the first half of 2015. Alrosa sold 18 million carats of rough diamonds worth $2.1 billion during the first half less than 21.1 million carats valuing $2.7 billion in the previous corresponding period. The slowdown in global diamond market hit the company in the second quarter. 

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