Moody's: Rough Diamond Prices Likely to Keep Falling

Mining Weekly reported that according to Moody’s, diamond miners may have to cut rough stone prices once again. Prices have fallen 18 percent since the start of 2015, and are expected to remain under pressure for the next 12 to 18 months.
As quoted in the market news:

“The latest drop in diamond prices, which are down about 28% from a peak in 2014, may be insufficient to revive demand and we think producers may have to cut prices further as supply and demand challenges continue into 2016. Producers’ decision to scale back production and/or sales will help rebalance the market over the next 12 to 18 months,” a Moody’s VP, senior credit officer and report author Denis Perevezentsev stated.
Counting in their favour, miners were benefitting from weak production currencies that would ease pressure on margins in the next 12 to 18 months. Price cuts and lower production volumes were weakening miners’ operating performance, Moody’s had found.
However, miners operating outside of the US would continue to benefit from lower costs owing to the depreciation of currencies such as the Russian rouble, Australian dollar and South African rand against the US dollar, the currency diamonds were sold in. According to Moody’s, this would help offset the impact of lower revenues on operating cash flow and profitability.
Moody’s expected that Alrosa would be least affected by the fall in rough diamond prices, as most of its costs were denominated in roubles, which remained weak since depreciating by 42% against the US dollar in 2014, while its revenues were mainly in dollars.

Click here to read the full Mining Weekly report.