Diamond cutting suppliers witnessing a progressive rise in prices of polished diamonds since December 2021-January 2022 

If you have been wondering what’s causing the extreme price variation in diamond prices, this could interest you! The diamond cutting suppliers have been witnessing a progressive rise in the prices of polished diamonds since December 2021-January 2022 as it witnessed sudden supply shortages, despite its two-year diamond commitment and contracts in place. There has also been a robust demand in the last year despite Covid. The uncertainty of this upwards movement of both rough and polished is proceeding stronger every week.

With credible inputs, it appears that the prices may rise further due to lower supply, which holds up rough prices along with an expected continuation of solid consumer demand. Dr C Vinod Hayagriv, Managing Director, 150 Years Heritage Luxury Jewellery House C Krishniah Chetty Group of Jewellers shares some insights on this price rise.

The beginning of the diamond trading season in 2022 came with a bang. The two world’s leading producers of diamonds raised their prices. Perhaps, attributed to the recovery measures from the losses incurred with many mining operations closed during the onset of COVID related lockdowns, movement of goods and restrictions.

The price has led to variations of large roughs between 8 to 15 percent, while the higher increase was visible with 12 to 20 percent for small roughs based on the quality and gem category of the mined roughs. Some exceptional roughs have witnessed an even higher price rise of over 50%.

The three factors seem to have impacted the prices and the recovery path of the diamond industries.

The first is the pandemic resulting in reduced manufacturing due to COVID. Then the depletion of excess inventory was built up by the mining companies during the pandemic due to the temporary closures of mining operations with limited production.

Second, the manufacturing units aggressively sought roughs to keep their manufacturing units churning out polished diamonds into the market. While some suppliers held back inventories, expecting to receive better prices later, leading to scarcity. This measure cautioned many jewellers before purchasing polished diamonds at higher prices.

The third factor – With the number of COVID cases drastically dipping – the rebound is quickly returning after a prolonged break. With the festival seasons also starting, the demands and the struggle to find diamonds to the specification needs and satisfaction of the customers have left jewellers in a lurch as estimations have never come closer to let them turn a profit.

Therefore, it is evident that the main force driving the market is the supply chain. Today, the polished prices reflect more on the cost of rough rather than demand. With no other option, the jewellery industry is forced with hiking diamond prices to protect its supply continuity and protect from shrinking profit margins. But for having to replenish their inventory after the seasonal sales.

The lifting of lockdowns and resumption of inter-regional travels, effective vaccination drives, and customers’ confidence with the ending of the pandemic has created a positive message for substantial growth and strong demand for polished diamonds.

Hoping the prices will bounce back, or should they be allowed a short-term readjustment for growth momentum as the market is just entering a seasonally slower period now. With crossed fingers, let us hope all mining companies have a bumper yield and a steady production to support stability for rough diamonds with controlled profit margins to facilitate the growth of the diamond jewellery manufacturers.

Courtesy: Times of India