The budget 2017 of ALROSA envisages diamond prices at the level of the last year, President Andrei Zharkov told reporters on the sidelines of World Economic Forum in Davos. At the same time, he noted that the negative consequences of the denomination in India have not yet been exhausted for the diamond market.
"The budget model has laid flat prices compared to the last year. But, of course, life is more diverse. Certain negative trends are not yet exhausted associated with the currency reform in India, which has had an impact on certain sizes [diamonds]," - said Andrei Zharkov.
"Now we look forward to the results of Christmas sales, which largely determine the trend in the first six months. We watch with cautious optimism,"- he said, reports Interfax.
Asked about the forecast for the extraction, Zharkov said: "We assume an increase by 5% compared to 2016. We quite substantially "cleaned" reserves in 2016, so we see an opportunity to increase production."
The CEO said that ALROSA has no plans to adjust prices for rough diamonds at the January trading session with long-term clients (January 18-22). "Rebalancing of price index based on the current stock of production is constantly going on - some size groups of goods are moving better, some - worse. But that we need to reduce or increase - no,"- he said.
Diamond prices were generally stable last year, after the fall in 2015 by 15% due to low demand caused by the insufficient margin in midstream (the main consumers of rough diamonds - diamond cutters and diamond jewelry manufacturers). At the expense of sales growth, particularly from runoff, the Сompany last year achieved a sharp increase in financial indicators. Revenue, according to preliminary data, increased by 26% - up to 4.486 billion dollars.
In 2016, the landmark for the extraction was 37 million carats; in the first 9 months of 2016 the Company produced 27.9 million carats. During the last year ALROSA adjusted production index (originally - 39 million carats) due to difficult market conditions, reducing the production of some of the alluvial deposits.