A sudden surge in polished diamond prices has added to the troubles of the industry, which is already hit by by labour shortage and high rough prices.
Jewellery fabricators have slowed down lifting of polished diamond amid problems of passing on the price rise to consumers.
Both rough and polished diamond prices have risen nearly 10 per cent since the beginning of the year. In the last six months, they have registered a sharp increase of 40-50 per cent.
High prices of precious stones and bullion have hit the domestic demand, when global market is already witnessing the cyclical post-Christmas slowdown.
“The biggest resistance is for the Rs 15,000-50,000 segement,” said Mehul Choksi, chairman of Gitanjali Group, the country’s largest branded jewellery maker.
“In my view, domestic diamond processors should give more time to the market to accept this price increase. I do not see any room for further price rise, either in rough or polished diamonds, in the near future. However, miners like De Beers and Rio Tinto may raise prices in order,” said Praveen Shankar Pandya, chairman, Diamond India Ltd and managing director of Revashankar Gems Ltd.
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Rough supplies from these two miners have become scarce over the last two years due to a slowdown in diamond mining.
According to a report by Rapaport USA Inc, De Beers, the world’s largest miner of precious stones that controls over 40 per cent of global supply, rough diamond sales have increased nearly 50 per cent in 2010, while production has climbed just 36 per cent to 33.5 million carats during the same period.
Pandya said fresh rough diamond imports from Zimbabwe may get delayed further, as the country has not accepted Kimberly Process (KP) that certifies miners to import genuine diamond. Shipments worth nearly $180 million are held by Indian importers in Dubai, as they await Zimbabwe’s decision on KP for exports to Antwerp.
Polished diamond prices are back to the pre-2008-crisis level. Global rough diamond production has risen around nine per cent in 2010, bringing it only 16 per cent below what it was in 2008. Average prices of polished certified diamonds rose 10.3 per cent during the last calendar year, with the biggest jump seen in larger diamonds of three carats or more.
“At present, customers are refusing to pay such high prices for diamonds. But, with the beginning of the ensuing wedding season, prices will be absorbed,” said Pravin Nanavati, joint secretary of Gujarat Heera Bourse based in Surat. Nanavati, however, confirmed lower demand has signicantly helped in building inventory.