Chennai: Lower demand from the Indian diamond processing industry has pulled down the quarterly sales of Alrosa, the world's second largest diamond miner, as inventories rose 36 per cent.
The Russian miner reported a steep 36 per cent year-on-year rise in inventories to 15.9 million carats at the end of the June quarter, as quarterly sales dipped 25 per cent in value to $796 million and 8 per cent in volume to 8.3 million carats. But production had risen 14 per cent to 9.7 million carats during the quarter.
Over the first half of the calendar year, Alrosa’s sales dipped 32 per cent y-o-y to $1,784 million in value and 16 per cent to 18.9 million carats in volume.
"Demand declined as a result of excessive stocking of rough and polished diamonds by cutters and retailers, and continued difficulties faced by India's cutting business in securing affordable financing," Alrosa said. It added that in order to "reduce excess stocks the Indian cutters have been decreasing output since May".
Data from the Gems and Jewellery Export Promotion Council shows import of rough diamonds fell 23 per cent in value terms and 25 per cent in volume terms in the June quarter.
Financial Chronicle too had recently reported how the Indian diamond polishing industry has been cutting working days, resulting in job losses. Unavail-ability of bank finance and destocking by markets like the US and China have forced small and medium polishing units to reduce their capacity utilisation.
Alrosa too pointed to the "ongoing consolidation in the jewellery sector and growth in jewellery sales through on-line channels in the US (that) result in a non-recurrent reduction in polished diamond stocks across the retail sector.”
Alrosa's average realised prices for gem-quality diamonds were down 21 per cent. However, small-size diamond sales were retur-ning to normal as India has been largely buying these diamonds.
Alrosa expects the situation to ease in the Sept-ember quarter as demand from jewellery consumers remains stable. This bodes well for renewed activity and higher demand for rough diamonds closer to the end of Q3 2019 in the run-up to the Christmas season, Alrosa hoped.
