Alrosa noting trend change on diamond market in 2014 - no seasonal volatility
MOSCOW. Aug 20 (Interfax) - The diamond market became more stable in 2014 due to a change in the existing trend, which expected a fall in prices from April-September amid a seasonal weakening in the demand for diamonds, the head of the Alrosa's client policy, Vladlen Nogovitsyn told Interfax in an interview.
"The situation on the market in 2014 is more positive than in previous years. There has been an actual change in trends. For three years in a row, a consistent pattern was observed: prices on the market sharply rise in March-April, after that stagnation follows, and then market prices fall until the autumn, in the fall the market perked up and then the cycle repeated itself again. This year the situation changed," he said.
A consequence of this was a more than 6%-7% growth in prices of Alrosa diamonds by the end of H1, the company said in a quarterly report. Alrosa is planning to have price growth of 5% for the year.
The main reason for the trend change is stable demand in the United States for diamonds and diamond jewelry. "We are observing enough steady demand for all categories of rough diamonds, most of all for those that are used in the production of diamonds for the U.S. market," Nogovitsyn said. "The second intensely growing market is India. China has somewhat slowed its growth but that was expected. Consumption in China all the same remains large enough. The European market is not very active at the moment," he said.
Banks, which earlier imposed serious restrictions for credit participants on the diamond market, became more willing to lend funds, Nogovitsyn said. "Banks see that profit has appeared on the market and activity has increased, and loans are being repaid. Banks have relaxed pressure on the market and started focusing on more liquidity in financing for clients from the diamond industry," he said.
The rise in prices on the market and the rise in demand have also led to a decrease in offers for Alrosa's rough diamonds on the spot market, he said. "This is connected to production processes that are currently ongoing at the company - the transition to underground mining, a stop to maintenance at the Udachninsky and Aikhalsky enrichment plants," he said.
