ALROSA sees a turnaround in demand; diamond prices in the coming months

 A gradual normalization of diamond and diamond product inventories across the entire supply chain from the cutting sector to retail is expected in the coming months.

“The normalization of inventories will act as a catalyst for a turnaround in diamond product prices. Price growth will be supported by strong demand for jewellery and a significant reduction in diamond mining capacity by as much as 20% compared to the levels of 2018-2019,” said Sergey Takhiyev, the head of corporate finance at ALROSA.

The decrease in demand and prices in the global market over the past two years was due to the accumulation of significant diamond and diamond product reserves in previous years, as well as the exponential increase in the cost of working capital financing in the cutting sector in India, which accounts for about 90% of the global diamond cutting,

“At the same time, the rapid development of online jewellery sales has allowed jewellers and retailers to structurally reduce their needs for inventories. As a result, the normalization of inventories took a long time,” Sergey Takhiyev added.

“Nevertheless, the decline in mining which has been observed in recent years due to the natural depletion of the global resource base, and the growing market capacity for luxury goods and jewellery products in particular, are factors that will drive long-term price growth for diamond products,” Takhiyev said.