Russia’s Alrosa (MCX: ALRS), the world’s top diamond producer by output, saw sales for rough and polished diamonds fall to $15.6 million in April, as the coronavirus pandemic continues to hit demand.
The figure compares to the $152.8
million the diamond miner fetched in March and the and $405 million in January.
Deputy CEO, Evgeny Agureev, said restrictions to slow down the spread of the virus and a falling demand had reduced trade to a minimum. He said he hoped to see an upward trend in demand as early as the beginning of the third quarter.
Last week, the Russian state-controlled company decided to halt production at two of its mines, saying that extended lockdowns affecting key players in the supply chain, including polishers and top retailers, has worsen market conditions.
It also said it would offer options
for online trade and relaxed payment terms for its contracts in March.
The diamond market began suffering from the effects of the covid-19 spread in early March, and measures to contain it have already pushed big and small miners over the edge.
Coronavirus effect
The pandemic has already squashed
diamond miners’ dawning hopes of a recovery in a sector already reeling from
weak prices and demand since late 2018.
De Beers, the world’s largest producer by value cut 2020 production guidance by a fifth last month. It had earlier cancelled its April sales event.
Canada’s Dominion Diamond Mines,
the controlling owner of Ekati mine and a 40% partner to Rio Tinto in the
Diavik mine, filed for insolvency protection in April.
Lucara Diamond (TSX:LUC), another Canadian company, posted last week a net loss of $3.2 million, or $0.01 a share, for the first three months of the year.
The figure was in sharp contrast with the $7.4 million in net income, or $0.02 in earning per share the miner reported in the same period last year.
South Africa’s Petra Diamonds
(LON:PDL) has recently delayed interest payments to borrow $21 million in new debt, a crucial move to keep
the company afloat.
Investment banks are increasingly
reluctant to extend credit to diamond producers, as inventory is not being sold
and defaults are possible, analysts have warned.
“We are concerned about oversupply
of rough diamonds following the reopening of economies, as a lot of inventory
could potentially be flooded into the system and the market might not be able
to absorb all of it, resulting in increased pricing pressure,” Citi said in an
early May note.