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Russia's ALROSA generates $1.2 billion in diamond sales in Q2

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(Kitco News) - Russia’s ALROSA, a global leader in diamond production, today reported its Q2 2021 diamond production of 7.0 m carats and sales of 11.4 m carats. Proceeds from rough and polished diamond sales totaled $1.2 bn.

The company said that Q2 diamonds output was down 8% qoq (+22% yoy) to 7.0 m ct mainly due to the seasonal increase in the processing of low-grade gravels. H1 2021 output rose by 6% to 14.5 m ct driven by the low base effect of 2020, which came on the back of the measures taken to cut output in 2020, including by suspending operations at the Aikhal and Zarya pipes and decreasing production volumes at Severalmaz.

Q2 diamond sales declined by 26% qoq to 11.4 m ct (incl. 4.5 m ct from inventories) on the back of the high base effect of Q1 (Q1 sales totaled 15.5 m ct, including 8 m ct of stock sales). Sales of gem-quality and industrial diamonds in Q2 amounted to 7.5 m ct and 4.0 m ct, respectively. H1 2021 sales were up 2.7x to 27 m ct, including 12.5 m ct from inventories.

According to a press-release, average realised price for gem-quality diamonds in Q2 grew by 28% qoq to $145/ct due to a higher price index (+7% qoq) and normalised sales mix (no impact of sales of lower quality inventories accumulated over the previous years). The 27% yoy decline was due to the higher share of large-size diamonds in the Q2 2020 sales mix, while sales volumes were at 0.6 m ct.

The company said that jewelry demand remains strong in all the key markets. At the same time, miners' rough diamond inventories hit a rock bottom levels as supply structurally dropped. The company noted it sees a limited risk of any meaningful supply response globally. Midstream is also witnessing a decline in the inventories of rough and polished diamonds. Diamond shortages boost demand and creates upward pressure for rough diamond prices, the company concluded.

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