Rough-Market momentum set to continue

Joshua Freedman

The resurgence in rough-diamond trading will persist for another two months as manufacturers fill supply shortages and retail demand rises, dealers predicted.

There’s still a gap, because demand is there, and supply is very limited and will be limited for a couple of months,” a sightholder said. Polished originating from rough bought in August won’t hit the market until mid-October, as it takes around six weeks to complete the entire manufacturing and grading process, he explained.

De Beers sold around $300 million worth of rough last month and Alrosa approximately $200 million after months of low sales that have led to scarcities in certain categories, industry insiders told Rapaport News this week.

Shortages have emerged in several polished categories as India’s manufacturing sector shut down from late March until late May due to the coronavirus pandemic. Those shortfalls will remain for the coming months as continued Covid-19 restrictions mean polished production is at around 30% to 60% of capacity, manufacturers said.

Cutting firms are considering shortening their Diwali breaks this year as they push ahead with filling orders for the fourth-quarter holiday season, executives said. While they usually pause activity for two to four weeks during the festival, which this year begins on November 14, manufacturers also recognize that the market improvement may be short-lived given the uncertainty surrounding the coronavirus.

“[In September and October, manufacturers] can buy from the market [in] the same quantity or lesser quantity,” a long-term Alrosa client explained.But in November, I’m not sure that this quantity will be sustainable. And then we will see how the Christmas polished sales [are].

Rough-price correction

Motivation to buy rough increased following De Beers’ rough-price cut of 6% to 8% for 1-carat goods and larger. Alrosa also reduced prices by around 5% to 7% across all categories, including the smaller stones. That helped raise profitability for manufacturers and resellers, as polished prices have firmed in the past month, sightholders noted.

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Source Rapaport

Photo © ALROSA.