Alrosa Lowers Rough Demand Outlook, Yet Considers Price Hikes

(IDEX Online News) – Moderate demand growth for diamond jewelry in the U.S. and Japan, and steady growth in Indian and China, are leading Alrosa to maintain its outlook that growth for rough will continue. It, however, lowered its forecast to 1 percent in 2012 over 2011.

In the beginning of 2012, Alrosa forecasted a 4 percent growth in rough diamond demand. However, the drop in demand for rough from manufacturers in the second and third quarters of the year led to a decline in prices and downgrade in the company's outlook.

Alrosa is looking to moderate the price decreases, stating on Friday that it is considering a moderate increase in price, "which excludes any pressure of speculative component on the rough diamond value by almost all assortment positions, a stabilizing factor contributing to better prospects of the market development in 2013."

The diamond miner adjusted its 2012 sales forecast to $4.59 billion, a 3 percent increase over 2011.

Alrosa expects rough diamond production in 2012 to total 34.4 million carats, a slight decrease from the 34.6 million carats produced in 2011.

Net profit for the year is projected at RUB 34.3 billion ($1.09 billion), more than 16 percent above last year's profit.

To meet those goals, Alrosa intends to expand its base of contracted long-term rough diamonds supply clients, focusing on what it called "geographical diversification of Alrosa’s sales policy."

In related news, the company it will earmark RUB 86 million ($2.7 million) for housing for orphans and children without parental care in the Sakha (Yakutia).