Indian origin customers have developed a deeper and closer understanding with Alrosa.
JIM VIMADALAL Director - Indian Representative Office, ALROSA
In conversation with -
After the overwhelming response in the 5th Polished Diamond Auction, from the next year, Alrosa intends to increase the number of polished diamond auctions. Could you please elaborate on future plans?
In 2021, we planned to host four polished auctions but managed to host five. This has inspired us to plan five international online polished tenders with physical viewings in the US, UAE and Israel for 2022, thus increasing our forecast. As before, we will auction regular diamonds 5.00 carats up, fancy coloured diamonds, as well as assembled sets for use in jewellery.
Please share the outcome of your delegation’s recent visit to long term clients in India.
The visit by our delegation was extremely insightful as always and helped in better understanding of our clients which helped in planning our recently announced LTA agreements from 2022-24.
The delegation was pleased to see the current state of the Indian midstream sector and consider it to be at an optimal level. We are happy to note our long-term clients have fully adapted to working in the challenging pandemic environment, being able to fulfil all supply obligations. Polished inventories have declined to their optimal levels, and the industry has begun to use its own funds more than on bank loans. Taken together, all of the above forms a solid base for consistent and successful 2022 for the diamond industry.?
What has been the impact since the opening of the representative office in Mumbai, India, in April 2018?
Since the opening of the representative office Alrosa's share of direct sales to India has grown by 1/3. Today each of the Indian origin customers whether from India, Antwerp, Dubai etc. have developed a deeper and closer understanding with Alrosa. Continuous communication with each of our customers and regular interaction has strengthened the bonds of our partnership. As the global cutting and polishing centre, India processes more than 90 per cent of all diamonds in the world, including ALROSA and we are constantly increasing our direct cooperation with all our Indian partners and also with GJEPC.
Do you feel the new Covid variant may affect demand in the coming days?
No, I do not see any impact. Recent news on the efficiency of the vaccines and boosters against new variants, as well as news of its “not-so-severe” impact, makes us more optimistic. Moreover, we are glad to see that cutters and polishers in India have fully adapted to working in the pandemic environment. They have proved their ability by fulfilling all supply obligations despite challenges.
Please give us an insight into the new list of long-term clients – members of the ALROSA ALLIANCE.
We have learned several lessons from the previous contract period. One of them is that rigid specifications are non-optimal during crises. Flexibility means efficiency. This is why we developed the long-term contracts’ model, which suits the current situation better than the previous one.
As you know, starting from 2022, we are introducing the customer segmentation to three categories – retail, manufacturing and trading. We have adjusted the list of our long-term clients – members of ALROSA ALLIANCE in accordance with the new rules.
One cannot expect any dramatic increase in rough diamond supply in the years to come, and we need to manage in the limited supply available. ALROSA highly values all its clients, focusing on additional value creation and satisfying the real-backed demand first.
I should also stress that based on our rules we will be able to offer long-term agreements to new ALROSA ALLIANCE members during the new contract period if they show strong spot sales and ratings.
What is the future outlook for rough diamonds?
Mid-term growth potential for rough diamond production is restrained. Global rough diamond output structurally decreased. Starting 2021 onwards it is estimated to stand at around 110 – 120 million carats per year as compared to 140–150 million carats prior to 2019.
On the other hand, our outlook for the diamond jewelry market remains positive. Prospects of personal luxury goods and jewellery sales, in particular, look good on the back of the disposable income growth in the emerging markets and deep-rooting cultural traditions of diamond jewellery gifts, especially among younger generations including millennials.
Moreover, inventories of both rough and polished goods along the value chain are reportedly low. What is important here is that the overall industry is in good operational and financial health.
We believe that these factors combined would provide support for both rough and polished prices in the long term.