Diamond Prices Likely to Stay Steady this Fiscal

Diamond prices may remain steady in the current financial year as the Diamond Trading Company (DTC) has indicated to the Indian industry that supplies may be 15-20 percent less than in the previous year.

Although this may lead to a drop in inventory levels of Indian diamantaires, traders said they do not expect exports of gems and jewellery to increase this year as bank finance remains tight for the sector, thereby continuing to limit business expansion.

“The move by DTC, the rough diamond sales and distribution arm of De Beers, may have a positive impact on prices but overall we do not see exports to grow in FY20. It may either remain flat or may fall 5 percent,” Colin Shah, vice-chairman, Gem & Jewellery Export Promotion Council told ET.

Exports fell 6.3 percent year-on-year during April 2018-February 2019 to $28,516.22 million. Shah said that getting bank finance has become harder in the current fiscal.

“Moreover, there are a lot of procedural issues which are slowing down exports of gems and jewellery,” he said. He said that if bank finance remains tight, then a portion of cut and polished diamond work may shift from India to China, Thailand, Russia, and Africa. In addition, he said, a portion of gold jewellery production may shift to China. Imports of rough diamonds fell 17 percent in April 2018-February 2019 to $14.31billion from a year ago as manufacturing activity at the cutting centres slowed down due to factors including a squeeze in bank credit.

Vipul Shah, managing director of Asian Star Company, said that domestic demand is also tepid on account of the ensuing elections. “Until the general elections are over and the new government is formed, nobody is interested in buying diamonds. Everybody is on a wait and watch mode,” he said.

Courtesy: Economic Times