ALROSA has decided that, starting this week, it will let customers offtake 40% of the initially contracted volume and carry the remaining part over to the end of May 2020. According to the company, such measures were taken amid the unstable market situation, which was greatly influenced by the rapid spread of coronavirus.
Image credit: ALROSA
“Obviously, amid such market uncertainty, it wouldn’t be right to keep our customers tied to their original contracts. We hope that ALROSA’s flexible sales policy and support measures will help market participants adapt to the new conditions, and pass them successfully through,” said Deputy CEO Evgeny Agureev.
Since the beginning of this year, ALROSA has been taking consistent steps to improve trading flexibility. By the start of its trading session in March, the mandatory amount of rough diamonds required to be bought had been lowered from 55% to 50%. In a stable market environment, for comparison, ALROSA usually sets this at 80% level, as was the case in 2018. Until mid-2019, it was 70%.
It was previously reported that De Beers also offered its customers additional flexibility during the February sales cycle, allowing them to delay the purchase of certain categories of stones.
Both giants of the diamond industry have already resorted to such measures last year, when an overabundance of rough and polished diamonds destroyed profit margins and banks tightened funding.
In early 2020, the market began to show signs of recovery, but a new wave of instability was introduced by the new coronavirus, which undermines the economic stability of many countries.
Victoria Quiri, Correspondent of the European Bureau, Rough&Polished, Strasbourg
