Russia’s top diamond producer, ALROSA, and its main global competitor, De Beers, have reportedly cut prices for precious stones after sales drastically dropped as a result of the coronavirus outbreak.
The London-headquartered De Beers, owned by Anglo American, was the first to announce the discounts earlier this week. According to Bloomberg, the miner, which is the world’s largest producer by value, told its buyers that it is cutting prices for large rough gems (bigger than 1 carat) by almost 10 percent. It did not offer discounts for smaller stones, as the company believes that they are not in much demand and this is unlikely to change even if the price is lower.
ALROSA, the world’s largest producer of diamonds by volume, reportedly followed suit. However, the Russian diamond major did not announce the discount, but changed its billing system instead. Buyers received a single invoice total and were not aware if the stones they were looking at were offered with a discount.
Although the pandemic almost brought the diamond industry to a halt and resulted in a huge plunge in sales, the two top global diamond companies were initially reluctant to lower prices, which are usually not made public. This was done to avoid flooding the diamond market and devaluing inventories. However, the recent move might signal that the miners think that demand is starting to recover as polishers will run out of rough diamonds soon.
ALROSA earlier predicted that a return to pre-pandemic rough sales levels may come in July, but then changed its outlook to October. According to its second quarter report, the diamond company’s sales were down 92 percent compared to the April-June period last year, while profit over the same period nosedived 98 percent year-on-year.
“We hope that [the] midstream, based on the new contracts, will start to manufacture,” deputy CEO Evgeny Agureev said, as cited by Rapaport. “They will have [the] next couple of months…to support all these contracts, [which] means September and October,” he added. “So we hope that in October we’ll be able to switch to our normal level of sales.”
For more stories on economy & finance visit RT’s business section