The year is ending on a positive note for Indian gems and
jewelry. The long-awaited lifting of the ban on Marange diamonds is welcome news for the industry, which already had seen
production affected by rough shortages.
While Indian manufacturers await their first delivery of
Zimbabwe diamonds — which had been stockpiled for months pending Kimberley
Process (KP) certification — Dinesh Navadia, president of the Surat Diamond
Association (SDA), had a word of caution. “It is indeed good news that the ban
has been lifted and that we will soon see a
healthy supply of rough coming in to fill in the shortages. But I do not
see how these shipments will be of much benefit to small and medium-sized players.
“The goods will be purchased by the big traders and
manufacturers at a very good price,” Navadia continued. “They have strong
backing from the banks and they will
undoubtedly use that money to purchase in bulk. But those big buyers
probably will not pass on those good prices
to their buyers, who are usually
small and mid-sized. The new shipments will take care of the shortages
of goods — of that there is no doubt — but as for the problems with the high
price of rough, I do not see where that will be helped much.”
Stable Prices Needed
If what Navadia says is true, there will be real concern if
the new rough goods are concentrated in the hands of a few strong players
because the industry as a whole would then see no benefit in terms of price stabilization,
which is very much needed.
Sharing his perspective, Aagam Sanghavi, director of Sanghavi
Exports, said, “The lifting of the ban was anticipated for a long time. If not
today, then later, but it would have happened eventually. Though it is certainly great news, it is no big deal! The
shipments should at least help the industry control the illegal trade in rough
and this in itself will bring a positive attitude to the market.”
Though the diamonds from Marange received the required KP
certification in November, U.S. State Department sanctions prohibit U.S. firms
from trading in Zimbabwe diamonds. Sanjay Kothari, vice chairman of India’s Gem
& Jewellery Export Promotion Council (GJEPC), said, “We have been having a round of meetings to
explore the possibilities of selling in the U.S. If the diamonds have the
required KP certification, we do not see a reason why the U.S. would not want
to buy these diamonds. As far as shipment and arrival of goods is concerned,
the rough from Zimbabwe has already been picked up. It is at present in Dubai
and we expect notification soon from India’s Ministry of Commerce that the
goods are being brought into India.”
Diwali Buying
The domestic market also
was encouraged by jewelry sales during the festive Diwali holiday season,
especially considering the high gold prices. Most demand was for stones from
.5 carats to 2 carats in G, SI. Gems and jewelry shopping always accompany
festive seasons in India. “This Diwali saw a good demand for gold jewelry.
Diamond jewelry sales were not as high as expected but they still were better
than 2010,” said Rajiv Jain, chairman, GJEPC. Noting that gold imports in 2011
totaled 1,000 tons, Jain said there was a very healthy supply of gold jewelry
in the market for the holiday. Added Kothari,
“In terms of volume, the sales of gems and jewelry were not good but
value-wise, they managed to just be on par with sales in 2010. Demand
for gold coins and bars was especially good this year, but that is not a very encouraging sign for us because this just makes
the World Gold Council (WGC) and gold miners happy. Overall, the gems and
jewelry industry does not benefit from
these sales. We have to work harder in
promoting the sale of jewelry.”
Industry Events
The first international colored gemstone conference, Mines to
Market 2011, held at Jaipur, was a grand success, according to GJEPC’s Jain,
who said approximately 350 persons attended. He observed that the conference
brought to light many issues faced by the
industry, including the inconsistent
supply of raw material and the use of
superior techniques to cut and polish colored gemstones. In light of the
conference’s success, Jain said, “We need to organize similar Mines to Market
conferences in Thailand and China.”
The next Mines to Market event will be held in 2013,
according to Kothari. “For a few years, we shall have this event every two
years and then we shall make it an annual event,” he explained. In addition to
the speeches and discussions, this year’s conference included such Indian cultural
events as classical music, folk and fusion bands and a sound and light show.
In other industry events, the third edition of the Indo-Euro
Summit was held November 15 to 18 in Mumbai with France, Germany, Poland and Eastern Europe participating. “Though
the attendance this year was not as good as what we saw in 2009 and 2010,” said
Jain, “we consider the summit a success in terms of quality participation and
the focus on boosting Indian exports of gems and jewelry.”
The Marketplace
• Overall, Diwali festival sales were softer than expected
in the local market.
• Following Diwali, the market reopened with positive
sentiment.
• Local demand is likely to improve due to the ongoing
wedding season in India.
• Polished prices have risen slightly due to lack of fresh
production and better demand from the local, U.S. and Far East markets.
• The volatile dollar exchange rate has had a negative
effect on trading activities in the market.
Article from the Rapaport Magazine - December 2011. To subscribe click here.