Sunday, March 6, 2011

Alrosa to Tender All +1 Carat Polished Diamonds

Alrosa wants to gain a greater benefit from the rising polished diamond prices, deciding to switch to a tender system. Effective immediately, polished goods weighing one carat or more will be offered only in tenders, the company announced.

The decision to tender polished is a surprising one as well as uncommon in the wholesale section of the diamond pipeline. The current rally in polished prices is taking place in a stiff competitive environment, reflecting a return to pre-crisis levels after rough diamond prices have already bounced back.

Until now, Alrosa sold all polished diamonds under one-time contract system.

The move raises fears that the company is also considering tendering its rough diamonds. Tenders in general tend to push up prices and therefore are popular among small and medium sized diamond miners. Tendering rough by the major diamond miners, is viewed as possibly destabilizing to the industry. Alrosa is the world’s second largest diamond company after De Beers.

The decision to tender larger polished diamonds was made on Friday by Alrosa’s Market Conjuncture Panel, chaired by the company’s President Fyodor Andreev. The panel reviewed the rough and polished diamonds market and the company’s current price policy.

Conventional wisdom among regular clients of Alrosa is that the company is going to hike prices of its rough diamonds in response to soaring rough diamond prices in the market. This will follow the practice of the other leading suppliers, led by De Beers.


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