New published results for Alrosa might point to a trend
Alrosa made their profit results known for 2018. A decline was expected. I’ve talked about some possible explanations here. But instead revenue has risen for 2018. This because there is an increasing demand for…higher quality diamonds. It’s not the cheap kind that’s driving growth, on the contrary, demand for them keeps decreasing, a trend we saw in the previous quarter too.
Sales volume of diamonds down, revenue and profits up
It’s a curious but not surprising correlation. Although the amount in carats has decreased by 12%, profit has increased by 15%. The reason is the quality of the diamond. As I explained in my 4 C’s of a diamond article, the price per carat grows exponentially, because bigger, high-quality diamonds are just harder to find.
Belgium nearly half of revenue
Another interesting fact from the profit results is that Belgium still is the biggest market for the Russian diamonds of Alrosa. This for me proves that Antwerp still deserves it place as diamond center of the world. A fact where we at Espeka are proud to be a part of.
What could this mean
A few factors play a central role here. As production fell last year, it’s no surprise the value of diamonds had to rise. Especially since the economy has done pretty well in 2018, which resulted in recovery of prices driven by stronger demand in major markets. Second, it could mean that diamonds are reclaiming their status as luxury item. People prefer the high quality gems. So maybe less people are buying, but when they buy, they go for higher quality diamonds. Which in my opinion is a great trend because it means craftsmanship and quality is appreciated.
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