Alrosa sees revival in polished diamond sales in 2016 on restocking

MUMBAI, Feb 5 (Reuters) - Global polished diamond sales are likely to rise 1 to 2 percent in 2016 as retailers replenish inventories that were run down in the second half of last year, head of the world's biggest diamond producer by output said on Friday.

"In the second half of the last year we saw lots of deferrals. Manufactures, retailers were destocking. They are now restocking as polished sales are improving," said Andrey Zharkov, president of Russian state diamond monopoly Alrosa .

Last year manufacturers, who cut and polish diamonds, deferred purchases of rough diamonds due to falling demand and weak prices of polished diamonds.

Sentiment has changed since the start of 2016 and in January rough diamond producers witnessed healthy demand from manufacturers.

De Beers, a unit of South Africa's Anglo-American and the leading diamond miner in terms of value, was reported to have cut rough diamond prices to boost sales.

However, Alrosa is not planning to cut rough diamond prices.

"At the moment, prices of polished diamonds are stable. In some sizes, they have even risen a bit. So we don't see any particular reason to lower rough diamond prices," Zharkov said on sidelines of an industry event here in Mumbai.

The company's margins have improved in last few quarters due to the weaker rouble and they are expected to remain stable in the current quarter, he said.

In 2015, lower purchases by Chinese retailers hit manufactures and forced them to curtail rough diamond purchases.

But in 2016 demand for polished diamonds is expected to be better in the United States and even in China, he said.

"In China demand is moving from one category to other, but it is there. Every year 10 million couple get married in China. They are accustomed to buying diamonds." (Reporting by Rajendra Jadhav, editing by David Evans)