ALROSA: unprecedented measures to attract buyers

“ALROSA retains its commitment to support its clients and the diamond industry and announces a new set of unprecedented measures to offer additional flexibility to its rough diamonds’ buyers,” the company said on Wednesday in a press release.
For the trading session taking place from 27 to 31 of July, ALROSA decided not to set the mandatory buyout minimum requirements under long-term agreements that traditionally cover about 75 percent of its overall sales, the press release said. Moreover, the clients have an option to defer some volumes from July to forthcoming sales periods of 2020. This provides flexibility to diamonds’ buyers and will help them to optimize their purchasing according to production and sales plans.
In April-June ALROSA implemented a set of measures to support its clients and the entire market. As part of these, the company’s clients could defer initially allocated volumes to the later months of the year. As a result, the volumes allocated for the second half of 2020 grew by nearly one third from historical levels. Having considered the situation, ALROSA decided to reduce by 50 percent on average (in carats) mutual obligations for the seller to supply and for buyers to purchase rough diamonds starting from August. This gives the company’s clients an additional flexibility.
“Jewelry sales show first signs of recovery after some counter-pandemic measures were lifted. However, most cutting and polishing facilities still operate at reduced capacity, while the polished diamonds demonstrate selective demand varying from segment to segment. That is why we decided not to set the mandatory purchase limit for the July session, allowing our clients to buy the goods they need now and to defer certain volumes to the consequent sessions of the year. Starting from August session, monthly volumes to be purchased under long-term agreements will be reduced by 50 percent on average in carat terms,” said ALROSA Deputy CEO Evgeny Agureev. “This decision reflects, among others, the fact that the production guidance for this year is lower by around a quarter comparing to the previous year. Nonetheless, after the allocations’ revision our clients will be able to purchase additional volumes at auctions and tenders as well as to request extra goods. This will allow them to replenish their inventories selectively, being more flexible when responding to the market demand.”