 "Community spirit helps Surat diamonds go global")
Gem and jewellery demand has shown an improvement in markets abroad, led by America's after a recovery in the country’s economy. This is after a sharp decline in these exports during April–December 2015, first nine months of the financial year.
The improvement has begun reflecting on polished diamond prices, up by three to four per cent in January.
India’s annual gem and jewellery export is $36 billion, around 13 per cent of overall merchandise export. Also, the diamond processing sector in India employs nearly a million skilled and unskilled workers.
“We have seen some encouraging early indications from holiday season sales in the US consumer market and greater trading activity than at the end of 2015. We stand at a crossroads. The midstream trading environment remains delicate, recovery remains a work in progress and our actions in the near future remain crucially important. Just as we have needed to take great care with our actions in response to the recent challenges, we must be equally watchful as things begin to improve,” said Philippe Mellier, chief executive of De Beers Group, which supplies around a fourth of the world’s rough diamonds.
De Beers had also cut prices by an average of seven per cent for its listed buyers early this week. Earlier, it and other major global suppliers had announced a cutback in output.
“After such a difficult year, it seems there are some reasons to be cautiously optimistic as 2016 begins, and we might be starting to recover some of the lost momentum, (though) we will experience volatility in the year ahead. There continues to be uncertainty regarding the macro economic outlook, currency pressures have the potential to weigh on downstream demand in a number of locations and we will need to see how retail restocking appetites develop,” added Mellier.
Gem and jewellery export from India fell 14.2 per cent to $23.3 billion in April–December as compared to $27.15 bn in the corresponding period last year. This caused serious problems for the Indian diamond cutting and polishing industry, with lots of small units on proprietary and job work downing their shutters and retrenching thousands of workers last year. Many divided family businesses joined their parents for survival.
“But, they have started gradually blossoming once again. Many small business units have mushroomed in the past two-three weeks on indications of a revival in jewellery demand this year,” said Dinesh Navadia, president, Surat Diamond Association.
Meanwhile, in response to weak jewellery demand, Indian processors purchased less (only to complete import orders) rough diamonds in the past six months, resulting in inventory levels falling to a month's need, from four to five months before Diwali.
“Since pipeline inventory is vacant, the demand would fully add to the overall orders to exporters,” said Pravin Nanavati, joint secretary, Gujarat Heera Bourse.
According to trade sources, mid-end and low-end jewellery demand has seen improvement in America, the world’s largest consumer of precious ornaments, 38 per cent of global consumption.
Nanavati, however, cautioned that importers need to restrain paying premiums on rough diamonds to avoid a slowdown again. A decline in roughs and a rise in polished diamond prices would provide a cushion to Indian exporters, he added.
