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In a major setback for Indian diamond processors and upbeat consumers alike, Diamond Trading Corporation (DTC), the online auctioning arm of London-based De Beers, one of the world's largest diamond miners and suppliers, has raised rough diamond prices by 3-5% across all categories for October sales. Rough import from Russia has also become costlier by 2-3%.
To get prices absorbed, however, De Beers has controlled rough supplies for sightholders and open market purchasers.
Indian diamond processors, however, believe the rough diamond price hike may hit customers' enthusiasm towards ornaments made of natural precious stones with the potential of proportionate increase in cut and polished diamond prices.
"DTC has raised rough prices by 2-3%. At the same time, the company has reduced supplies perhaps to get price adjusted. But, Indian processors have so far restrained from price hike which will affect their margins," said Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC).
De Beers contribute around 40% of global rough supplies. Since 11 out of 13 rough diamonds mined globally are processed in India, any price hike will affect Indian processors directly.
De Beers enjoys its monopoly in rough diamond supplies to India through around 38-39 sightholders and another dozens of online auction participants. Other rough suppliers are Australia - headquarterd Rio Tinto and Russian diamond miner Al Rosa.
"DTC has reduced its sales in Ocotber," Shah said without quantifying the supply cut.
Indian diamond jewellery manufacturers and exporters are currently witnessing a rebound on consumer sentiment both India and abroad ahead of the festive seasons. Jewellery sales in the domestic markets are expected to remain robust during the ongoing festive season beginning Dussehra.
The festive glitter was added with a decline in food inflation which left more disposable income at the hands of consumers. The upbeat business sentiment is likely to add glitter to the festive jewellery demand. Also, the steep fall in gold and silver prices has made investment in diamond jewellery attractive.
The long term fundamental of the diamond industry remains strong and robust despite liquidity squeeze because of the closure of Antwerp Diamond Bank. Diamonds sales are growing in emerging markets including China and India.
"Cut and polished diamond prices will also increase proportionately as diamond processors would certainly pass the rough price increase on to consumers," said Mehul Choksi, managing director of Gitanjali Gems, also a sightholder of De Beers.
The price hike, however, may affect consumer sentiment albeit temporarily. The Indian diamond processors have seen a robust consumers trend after months of lull sales.
From overseas markets also, the price hike ahead of peak demand season from the Christmas in December to the Mothers' Day in February, will affect sales. Both Domestic and global markets show a positive sign in the coming festive, wedding and thanksgiving season which comprises over a third of annual sales.
The economic uptrend in the United States has increased jewellery orders to India. Experts estimate 10-15% jump orders for this festive season which will reflect in October's gems and jewellery export figures, said Samir Sagar, Director, Manubhai Jewellers.
