Alrosa production of 12.1 m carats in 3Q
Q3 diamond production seasonally grew by 24% q-o-q (up 15% y‑o‑y) to 12.1 m cts due to the launch of production at new deposits and expansion of the existing ones (for more details see page 5). As a consequence, production in 9M 2019 reached 29.7 m cts (up 12% y-o-y).
Q3 ore and gravels processing seasonally grew by 64% q-o-q (flat y-o-y) to 17.2 mt. A 3% y-o-y increase in 9M 2019 to 34 mt was mainly due to the ramp-up of production at the V.Munskoye deposit and increased productivity at the Nyurba and Udachny Division’s processing plants, Ore and gravels inventories as at the end of Q3 2019 seasonally decreased by 26% q-o-q (up 9% y-o-y) to 23.6 mt.
Q3 average diamond grade stood at 0.71 cpt, representing a seasonal decrease of 24% q-o-q, though on a y-o-y basis grades increased by 16%. 9M average diamond grade grew by 9% y-o-y to 0.87 cpt, driven by an increase in high-grade ore processing at the Botuobinskaya pipe.
Q3 diamond sales decreased by 23% q-o-q (down 5% y-o-y) to 6.4 m cts, including 4.3 m cts of gem-quality diamonds (down 28% q-o-q and 8% y-o-y), against the backdrop of reduction in stocking by cutters and retailers (for more details see page 3). 9M sales shrank by 13% y-o-y to 25.3 m cts, mainly driven by lower sales of gem-quality diamonds (down 14% y-o-y).
Diamond inventories as at the end of Q3 2019 increased by 36% q-o-q (up 40% y‑o-y) to 21.7 m cts due to both seasonal production growth at alluvial deposits and weaker sales. Q3 2019, average realised prices for gem-quality diamonds rose 4% q-o-q (down 32% y-o-y) to $135/ct, driven by an increased share of medium- and large-size diamonds.
In Q3 2019, the diamond price index came lower by 3% q-o-q, down 7.5% year-to-date. Q3 diamond sales in value terms went down to $601 m (down 24% q‑o-q and 37% y-o-y), with 9M sales amounting to $2,386 m (down 34% y‑o‑y).
Rough and polished diamond market overview:
Diamond jewellery demand is being affected by increased macroeconomic uncertainty weighing negativity on consumer confidence. Amid the declining demand since the beginning of 2019, diamond jewellery producers and cutters have been actively reducing their polished and rough diamonds stocks (year-to-date rough diamond purchases decreased by 13% y‑o-y).
However, the second half of Q3 2019 saw an upward trend in rough diamond sales after a turning point in destocking, thus creating a basis for the market recovery in the future.
