Alrosa Sees First Sales Increase Since Feb.

RAPAPORT... Alrosa's sales rose 19% year on year to $216.7 million in August as the miner reduced rough prices to spur demand amid an improvement in the diamond market.The month saw the company's first revenue increase since February, as manufacturers sought rough goods to fill shortages ahead of the holidays. It was also the highest sales value since the start of the coronavirus crisis.Rough sales rose 12% to $202.1 million for the month, the company reported Thursday. Polished revenue soared to $14.6 million from $1.5 million a year ago, primarily reflecting Alrosa's acquisition of Russian manufacturer Kristall at the end of 2019.Diamond-jewelry demand has recovered gradually in recent months, especially in the US and China, while inventories have declined at both the retail and midstream levels, Alrosa explained. In light of this situation, the miner cut prices by around 5% to 7% across a broad range of rough categories at the August contract sale after refusing to budge on prices during the pandemic."Demand for rough diamonds is picking up, which is a good sign as we approach seasonal growth in market activity in [the fourth quarter]," said Alrosa deputy CEO Evgeny Agureev. "Hopefully the support we offered our long-term clients in March to August [will have] a positive effect on restoring the supply-demand balance, and [will help] the diamond market overcome [its] most challenging period."The miner allowed clients to defer purchase allocations at its April, May and June contract sales. It extended this in July and August by enabling outright refusals that didn't result in customers accumulating purchase obligations at the end of the year. The flexible strategy crushed the company's rough sales during the period, with diamond revenue for the first eight months of 2020 falling 43% year on year to $1.24 billion. Rough sales plunged 45% to $1.18 billion, while polished jumped 84% to $63.6 million.Image: Hands holding rough diamonds. (Alrosa)