According to media reports, as diamond prices continue to plummet, Russian diamond giant Alrosa PJSC has taken an almost unprecedented step to stop all diamond sales to support the market. Alrosa said in a memo to customers that it would suspend rough diamond sales in September and October. Alrosa said it believed the move would resolve the mismatch between supply and demand that has emerged in recent months.
Alrosa is one of the world's largest diamond giants, supplying about one-third of the world's diamonds, equivalent to DeBeers, which had a monopoly until the beginning of this century.
So far, De Beers has no plans to cut sales and is offering buyers more flexibility. De Beers has allowed buyers to defer up to 50% of purchases of diamonds larger than 1 carat for the rest of the year, people familiar with the matter said, and the company told customers this week they would not have to buy some smaller diamonds.
De Beers holds 10 order fairs each year to sell rough diamonds to specific customers, and buyers usually must accept the price and quantity specified by the company. While buyers can refuse to buy, doing so will affect future distributions they receive, so buyers generally accept De Beers' terms.
In the wake of the COVID-19 pandemic, demand for diamonds has weakened across the board as consumers have begun shifting spending toward travel and other items, and the slowdown in global economic growth has further eroded luxury spending. The decline in diamond prices has intensified in recent weeks as concerns about demand have continued to grow, coupled with growing competition from lab-grown diamonds.
Data shows that the Diamond Price Index of the International Diamond Exchange reached a historical peak of 158 in March 2022, and then fell to the current level of around 110, a new low in the past five years.
Earlier this month, the Indian Diamond Association called on miners to limit supply. About 90% of the world's diamonds are cut, polished or traded at the Diamond Council of India.
Diamond miners, who dominate the industry, have a long history of cutting supply when demand weakens, but freezing sales entirely would be highly unusual.
People familiar with the matter said that whether it is a large diamond or a small diamond, the price on the secondary market is more than 10% lower than that of Alrosa and De Beers. This suggests miners may need to cut prices further.