Diamond mining company Alrosa to offer zero buyout obligation to its clients despite demand revival

Kolkata: Russian diamond miner Alrosa will offer zero buyout obligation to its long-term customers of rough diamonds in the next trading session from September 21 to 25 despite a revival in demand from cutting and polishing units in Surat in August and early September.

This is because the miner feels there is an uncertainty related to the risk of a new wave of counter-Covid restrictions as well as to consumer sentiment.

“In August and early September, there was an evident revival for demand of rough diamonds after several months of Covid-induced halt,” said Jim Vimadalal, director at Alrosa’s India office. “Nevertheless, the market has not reached a balance yet. Together with a risk of a new wave of the disease, industry participants must remain cautious and responsible,” he told ET.

The miner had extended this facility to its major clients in July and August as well to avoid pressuring the market.

“Alrosa maintains the most flexible conditions during September trading session for its long-term clients, aiming to nurture the green shoots of market recovery,” Vimadalal said.

Imports of rough diamonds by the Indian diamond trade went up by 114% month on month in August to Rs 3,717.12 crore in value terms, and by 151% in volume terms at 6.25 million carats, according to Gem & Jewellery Export Promotion Council.

“During the last month we clearly saw the growing demand for rough diamonds as cutting and polishing factories in India are ramping up and revived Chinese jewellery sales dynamics is encouraging,” Vimadalal said. “On the other hand, there is still an uncertainty related to the risk of the new wave of counter-Covid restrictions as well as to consumer sentiment. This is why we would be able to talk about the full-scale market recovery only based on the results of the key holiday season in the USA In this situation, we maintain our commitment on supplying the real demand and holding back the speculative trade.”

The company will give its long-term clients an opportunity to request only the goods they need as the speed of the demand recovery varies across the product mix. Long-term agreements traditionally cover about 70% of Alrosa’s overall sales.

During the September trading session, clients may review goods either remotely, getting detailed specifications through videoconferences, or by visiting Alrosa’s office with all Covid-preventive measures in place, Vimadalal said.

Gem and jewellery exporters are hoping for better export numbers in coming months.

”We have witnessed initial signs of recovery from markets like the US, China, and Europe,” said Colin Shah, chairman of Gem & Jewellery Export Promotion Council. Exports have recovered significantly from a low of $36 million in April to $1.7 billion in August, he said.

“All the gems and jewellery export units are working in full swing and the trade is getting back to normalcy,” Shah said. “We are hopeful that we will be able to restrict the downside of exports to just over 20-25% at the closure of the fiscal year, as compared with previous year exports of $29 billion.”

Courtesy: Economic Times