Polished stones may pinch with Surat in long vacation mode

Diamantaires in Surat have extended the Diwali vacation to 21 days this year from a week or 10 days in earlier years due to the rising price of roughs and lower availability due to supply constraints. If the cutting and polishing units do not work for 21 days, it’s expected that polished diamond prices will go up as supplies will get squeezed at a time when there is robust global demand.

Cut and polished diamonds are a major revenue earner for India. The overall gross exports of cut and polished diamonds stood at Rs 91,489.2 crore in the April-September period, up 122.62% from the year earlier. “Even though rough diamond prices were going up due to supply constraint, polished prices were not witnessing an upward trajectory and the processors’ margin was not moving up,” said Vipul Shah, vice chairman, Gem & Jewellery Export Promotion Council (GJEPC). “The long vacation will bring down the supply of polished prices and hopefully polished prices will go up.”

The robust demand for cut and polished diamonds since Covid has helped workers at Surat’s units. Thanks to the growth in exports, they raised salaries 5-8% recently even though about 50 units are yet to pay workers a Diwali bonus, said Ramesh Zilriya, president of the Diamond Workers Union of Gujarat. “We have brought it to the notice of the government,” he said.

Zilriya said the price of roughs should moderate while those of polished stones rise, keeping exports buoyant. The diamond trade in Surat employs 700,000-800,000 people.

Manufacturers note it is difficult to find profitable supplies of roughs after prices rose an estimated 20% since the year’s beginning, according to the Rapaport Rough Price Index.

‘Strong Orders Expected’

“We are expecting a good holiday period in the US,” said GJEPC vice-chairman Shah. “Diamond exporters are expecting strong orders in the first quarter when jewellers and dealers in the US replenish inventory sold during the season.”

Retail jewellers in the global markets are upbeat about the November-December peak selling period, as highlighted in the latest issue of Rapaport Magazine. Consumer confidence is improving while the spread of the Covid-19 delta variant has eased. The gradual return of travel and the experience economy will bring renewed competition to the jewellery market, experts said.

Courtesy: Economic Times