Big producers of diamonds slash prices

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Russian diamond miner Alrosa PJSC has entered competitor De Beers in price cuts for their diamonds but has modified the billing system to make sure purchasers cannot say which stones or how much is reduced.

And as revenues crashed after the coronavirus pandemic, the two largest manufacturers hesitated to drop their price for months so as not to give in to too much until interest came back. De Beers and Alrosa have not published rates for their rough stones, and over the past years, the two businesses have allowed their consumers to set conditions.

De Beers cut prices for bigger pillars by almost 10 percent earlier this week by a sign that the miners see returning demand. Alrosa’s buyers, according to people familiar with the situation, also lowered prices at last selling. But the company issued a single invoice total for each customer instead of usual individually priced diamond parcels, the people said. They said that Alrosa hadn’t explained the change.

Traditionally, the two major producers have tried to avoid rip effects through the supply chain by keeping any price cuts down. For instance, polished diamond buyers like jewelers can search for lower prices from De Beers and Alrosa ‘s customers by using information.

“In the worst phase of the crisis, we avoided speculative commerce, keeping intact price over volume strategy. When we begin to recover demand for rough diamonds, we make sure our long term contract price reflects the real market trends and confirmed real demand. It’s the only viable strategy to protect the value of stones in market conditions which our industry faces recently.”Evgeny Agureev, Alrosa’s Head of sales, said.

During the crisis, two diamond companies made the new move to slash the rates in a sequence of adjustments to traditional selling laws. They have also allowed consumers in alternate places to renege on contracts and show diamonds. However, smaller players operated at a loss of 25 percent and absorbed the company’s market share.

Since most major cutters and polishers have bought hardly any stones since February, their inventory is small and demand for rough diamonds will eventually grow. However, it will focus on customers returning to jewelry stores to a sustained recovery in the industry. The US will remain important because it accounts for about half of all revenue, while demand in China has risen.

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