Alrosa sells rough diamonds at 5% above starting price at auctions
MOSCOW. Aug 31 (Interfax) - Alrosa , the Russian diamond monopoly, saw strong demand at the auctions for rough diamonds it held on August 29-30, with sales prices exceeding starting prices by more than 5%.
The starting prices were equivalent to the company's current selling prices.
The auctions, which offered virtually the whole range of the company's output, were held in Moscow, Hong Kong and Tel Aviv, Alrosa said in a statement.
The auctions sold about 90% of the represented lots of various size and weight groups for a total of about $22.5 million, the company said.
Following the results of the auctions, Alrosa's unified selling organization noted firm potential demand and price stabilization for almost all groups of rough diamonds. The company attributes the slight decline seen for certain categories to a dramatic decrease in the influence of speculative factors on the market.
The growth of demand for rough diamonds amid a limited resource base on the supply side and stronger demand for cut diamonds driven by markets in the Asia-Pacific region point to future further growth of prices across the market as a whole, despite the natural correction for a number of "overbought" speculative positions, an official at the company told Interfax.
Prices for rough diamonds currently exceed the pre-crisis levels of 2008. As rough rose in price, analysts did not rule out a market downturn, with prices falling by as much as 15%.
Alrosa uses auctions to sell a broad range of diamonds, primarily in order to monitor market conditions. The company sells most of its diamonds - about 70% - under long-term contracts. The remaining rough diamonds of regular size are sold on the spot market and at auctions. Large diamonds, weighing 10.8 carats or more, are sold separately.
Alrosa mines a quarter of the world's diamonds. It boosted output 5% last year to 34.336 million carats and sold $3.484 billion in cut and uncut diamonds. It plans to mine 34.438 million carats this year and is targeting sales of $4.7 billion. Output grew 10% year-on-year in H1 to 19.326 million carats.