ALROSA held a specially organized meeting to discuss problems in the diamond industry, which was held on December 6. The company said that the seminar was attended by ALROSA’s management, headed by Sergey Ivanov, the company’s CEO, the delegates of such organisations as the State Bank of India, NBF, ABN AMRO, and representatives of the DelGatto and Channel finance funds.
“Changes in the rough and polished diamond industry reflect global transformations, ranging from shifts in consumer behaviour to tighter financing requirements. As part of the workshop staged by the Company for the first time, we got together with representatives of the financial sector to discuss key factors behind the weaker diamond market environment in 2019 and steps that need to be taken to shore up market stability in the long term. During the meeting, an exchange of opinions and experiences as part of an open dialogue has generated many useful insights. With transparent operations of industry players being one of the key drivers behind market efficiency, we have decided to hold meetings with financial institutions on a regular basis,” said Sergey Ivanov, ALROSA’s CEO.
The company also said that the diamond market began to show signs of stabilization. Demand for jewelry in the world in the III quarter began to recover, mostly due to consumers from the US market.
The midstream also showed prospects for destocking.
However, a more accurate assessment of the industry can only be made based on sales volumes in the festive winter season, as they will show if the current upward trend is here to stay.
The banks recognised the efficiency of the measures ALROSA had taken to support the market, above all the reduction in diamond sales volumes. They believe that the “price over volume” strategy chosen by diamond producers has helped the cutting segment to “digest the overstocking” amid a funding crunch in the midstream segment in India, which is home to more than 90% of all cutters.
The participants also mentioned other support that ALROSA provided to its customers this year, including the gradual lowering of the mandatory amount of rough diamonds required to be bought during a trading session. The banks say that the flexible customer approach also enables the market, and notably the midstream, to continue operating in a tough environment.
Following the meeting, several key points were highlighted - the need for greater transparency in the industry in order to have access to bank financing, the need to introduce changes in the midstream, and the need for implementation of marketing initiatives, as market growth can only be driven by stronger consumer demand for diamond jewellery.
Victoria Quiri, Correspondent of the European Bureau, Rough&Polished, Strasbourg
