Kristall buys fewer diamonds from Alrosa in July due to sharp price rise - executive
MOSCOW. July 22 (Interfax) - The Smolensk company Kristall, Russia's largest diamond-cutting outfit, has this month cut its purchases of raw diamonds from its main supplier Alrosa , Russia's diamond monopoly, due to a sharp increase in prices, Kristall's deputy general director and director of production, Vyacheslav Rayevsky, has told Interfax.
Kristall's purchase prices for Alrosa diamonds were up 20%, for certain types - 35%. Since the start of the year, prices growth for an assortment of diamonds acquired from Alrosa has reached 40%, Rayevsky noted. Prices for brilliants have only gone up 25% since the year began.
Kristall bought from Alrosa just 81% of its planned procurement in July, Rayevsky said.
According Alrosa, prices growth for the diamonds supplied to Kristall was less steep - not over 25% from the start of the year and 15% in July.
Kristall is the largest of Alrosa's clients, both in Russia and abroad, buying up to 50% of the diamonds it needs and having periodically exercised its right to decline some of the product offered by Alrosa, Rayevsky said.
An Interfax source at the Russian Finance Ministry said that Alrosa diamond prices have risen 50% since the year began. Recent Finance Ministry changes to the raw-diamond price list will not have a great impact on Alrosa pricing, even though the new list provides a reduction in price for high-quality and large diamonds. The price list is no more than an indication of which way the wind is blowing; in long-term contracts and in sales on Alrosa's market there is such a markup applied that the price list cannot be considered a price guide for the company, the Finance Ministry official said.
Alrosa's prices for domestic-market deliveries (including to Kristall) are about 6.5% lower than the company's export prices for a comparable assortment, and compared with competitive sales the price difference is already appreciable, Alrosa told Interfax.
Asked whether Kristall would appeal to regulators over the price rises, Rayevsky responded, "We are never inclined to resolve issues outside our dialog with Alrosa. Furthermore, the possibility of changes in price is envisioned in our delivery agreements, though the hope is that only as much as price increases on the world market for brilliants."