The annual summer vacation for the diamond industry in India is when the production centres are shut down; and the market tries to set right the inventory that has piled up during the year. Due to no production during the month, shortages of polished goods coupled with increased demand, price correction becomes effective and semblance of a ‘strong’ market returns, albeit for a short period... before the production resumes in full swing in the month of June.
On the whole, polished trading in Mumbai was quiet during the month, but preparations were afoot for the JCK Shows as USA is the biggest market for loose polished goods as well as finished goods. The Indian industry was looking forward with positive expectations for the Las Vegas show, with the hope that the Show would indicate a strong U.S. market that would take care of their business for the next year.
For overseas buyers, the month was a period of leisure buying and closing deals. While demand from US was stable with many buyers seen around the market, there was subdued demand from Far East. However, good quality stones, especially caraters were in good demand but 20 and 50 pointers of good quality moved very well, with demand exceeding supply. As usual, good demand was noticed for fancy cuts like princess, oval, marquise, etc., but for smalls.
From the domestic market, demand for polished goods during May was very good for all quality and size of rounds. Fancy cuts are also picking up demand very well like baguettes that have caught the fancy of the younger jewellery consumers.
Rough trading was stable and the industry looked for price lowering or corrections from ALROSA, De Beers and other producers, which may stabilise the polished market to an extent.
The Gem & Jewellery Export Promotion Council (GJEPC) of India announced the industry’s provisional figures for trade performance during the month of April. On the whole, the industry seems to have under-performed, as the cut and polished exports for Apl.’15 registered a decrease of 11.03 percent recording $ 1635.71 million as against $ 1838.54 million during Apl.’14. In volume terms, the decline of polished exports was 5.73 percent, recording 2.524 million carats in Apl.’15 as against 2.677 million carats in Apl.’14. Rough exports of $ 111.50 million for Apl.’15 as against $106.34 million for Apl.’14 showed an increase of 4.94 percent. However, rough exports indicated a decrease in volume terms by 5.21 percent, recording 2.242 million carats in Apl.’15 as against 2.365 million carats in Apl.’14. Rough imports in Apl.’15 recorded $ 1370.82 million as against $ 1989.57 million in Apl.’14, indicating a decrease of 31.10 percent. In volume terms, too rough imports decreased 16.43 percent to 11.161 million carats in Apl.’15 from 13.355 million carats in Apl.’14. Polished diamond imports recorded $ 244.13 million for Apl.’15 as against $ 412.12 million for Apl.’14, decreasing by 40.76 percent.
The US remains the largest market for Indian goods. For the 12th consecutive year, India’s Gem & Jewellery Export Promotion Council (GJEPC) was presenting the India Pavilion comprising of 67 top gem and jewellery exporters, which encompassed plain and studded diamond and coloured gemstone jewellery at the JCK Las Vegas. India accounts for 22% of USA’s import of gem and jewellery products. The country’s total gem and jewellery exports worth of US$ 36.05 billion recorded in Jan-Dec 2014, of which exports worth US$ 7.16 billion were to the USA. Gold jewellery stood at US$1.38 billion whereas coloured gemstones recorded exports worth US$ 0.78 million. Cut and polished diamonds exports were worth US$ 5.26 billion in the same period, marking the USA a key export destination for India.
Back home in Surat and Mumbai, the Indian diamond industry known for its traditional image and its system of using paper chits for diamond deals are now planning to adopt more secure systems such as the exchange of promissory notes, checks and jhangad (entrustment note)...a step in the right direction!
The Surat Diamond Association (SDA) launched a campaign to reduce the number of defaults in the industry and to better protect diamond merchants.
And finally, it looks like the Indian industry’s yearnings will soon take shape as the Maharashtra (a Western Indian State) government, with Mumbai as its capital city, has decided to set up a jewellery and knowledge smart city in the State. If this materialises, many of the industry’s woes will be sorted and addressed. The ‘Smart City’ will have support activities like a training institute, research centre, exhibition and convention centre, residences for employees, a hostel, schools and hospitals.
Most of the world’s gold seems to be hoarded in Indian homes, if the report placed before the Indian Parliament is correct. Replying to a question about the foreign exchange used to import gold during the last three years, the concerned minister said USD 34.41 billion was used in 2014-15; USD 28.70 billion in 2013-14 and USD 53.82 billion in 2012-13. Also, it was revealed that the Reserve Bank of India (RBI) holds 557.75 tonnes of gold, while over 20,000 tonnes of the yellow metal is held by the public in the country. The Indian finance ministry issued a draft gold monetisation scheme on 19th May aiming at unlocking the value of the yellow metal held by Indians.
In the Indian jewellery market, Tribhovandas Bhimji Zaveri (TBZ) Ltd, a noted Indian jeweller and jewellery retail chain, has announced plans to achieve 25% retail expansion over the next one year. TBZ, which till now had only company owned and managed stores, is going forward and plans to open franchisee stores, who will account for their inventory separately. The company plans to increase its current retail space by over 60% over the next three years.
Kirtilals, a noted jewellery and diamond house from India has launched a ‘mobile solitaire lab’ aimed at empowering the buyer to take informed decisions while choosing the right diamond - a move that should be followed by other jewellers to grow their business.
Aruna Gaitonde, Editor-in-Chief of the Indian Bureau, Rough&Polished
