De Beers cuts rough diamond prices by 5%

retail
By retail November 8, 2019 16:39

De Beers cuts rough diamond prices by 5%

Reeling under relentless fall in demand amid economic crisis in most consuming countries, De Beers has cut rough diamond prices by five per cent in its November auction. De Beers, the largest supplier of diamond, has cut prices for the first time in several years as the demand in its auction for rough has shrunk.

The move will salvage the sinking Indian cut and polish industry which is struggling under tremendous credit crunch as most of the banks have stop lending to the industry after series of defaults by large players. The cut in prices will improve the profit margins for traders and cut and polish industry.

According to De Beers data, retail demand for diamond jewellery has increased by 2.4 per cent last year whereas in the US market, where almost half of all diamonds are sold, the increase was 4.5 per cent. While the retail market has seen strong demand, the wholesale demand from polishers and traders were lowest in three years due to oversupply and financing difficulties

Interestingly, the benefits of cut in rough diamond prices may not be passed onto retail consumers. Reflecting the trend Diamond1Ct futures contract on Indian Commodity Exchange settled up 0.27 per cent at 3,556 per carat. In fact, diamond for December delivery on ICEX has been consolidating in the broad range of 3,400-3,650 this year and the trend is expected to continue unless a structural change occurs on the physical side of the market.

Turnover of diamond trading on ICEX, the only exchange to trade in diamond, jumped three times to 2,436 crore in October from 788 crore logged in September.

Ajay Kumar, Director, Kedia Advisory said hopes of peace in the economic trade war between US and China has brightened as both the countries work to narrow their differences. This will boost global economy and drive demand for diamonds which sells on consumers sentiments, he said

However, sentiments currently in spot diamond markets are low and has not improved after Diwali. The sale of jewellery in the September quarter was down 16 per cent at 461 tonnes. Weak consumer sentiment due to continued geopolitical and economic uncertainty, coupled with substantially higher gold prices, dented jewellery purchases in all major markets.

Courtesy: HindubusinessLine

retail
By retail November 8, 2019 16:39
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