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Indian Jewelers Readying for Strong Gold Season

Aug 9, 2015 11:59 PM   By Avi Krawitz
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RAPAPORT... The recent drop in gold prices inspired strong traffic at the India International Jewellery Show (IIJS) as local jewelers expect steady sales during the upcoming Diwali festival and wedding season.

“Gold prices are down so consumers are coming into the stores again,” said Alkesh Shah, vice chairman responsible for jewelry at Gold Star, a Mumbai-based diamond and jewelry manufacturer. “The show was better than expected and we expect a better season this year.”

The price of gold fell 12 percent in the past two months sparking renewed consumer interest in the yellow metal, jewelry wholesalers told Rapaport News. Gold was trading at $1,095 an ounce at press time on Monday and at INR 69,809 an ounce quoted in rupee. One exhibitor, a jewelry manufacturer and wholesaler who requested anonymity, noted that stores have seen a mini-rush since July as consumers still see investment value in gold.

 
 Floor view of  IIJS Show

Sabyasachi Ray, executive director of the Gem and Jewellery Export Promotion Council (GJEPC) which organizes IIJS, said that exhibitors had low expectations at the start of the show because the retail market has been slow this year.

A government economic survey in July estimated that the economy grew between 5.4 percent and 5.9 percent in the fiscal year that ended March 31, 2015 but activity is still hampered by a slowdown in the global economy and weak consumer and business sentiment. However, Ray explained that consumers have started to buy jewelry again thinking that gold prices may have bottomed out.

“That changed the mood at the show and it’s a good omen for the season,” he said. Attendance at IIJS increased about 17 percent from last year to 35,000 visitors this past week and that the value of orders at the show increased 20 percent to an estimated $940 million (INR 60 billion), compared to $785 million (INR 50 billion) at IIJS 2014, according to Ray.

He noted better-than-expected activity in the gold jewelry section and studded jewelry also did well. He said that if all those orders translate to sales in the coming months, wholesalers and retailers will need to return to the diamond market for goods.

Diamonds Slow

Diamond trading at the show was weak and diamantaires maintained deep worries about the global diamond market. Rajesh Lakhani, director at Kiran Gems, a Surat-based diamond manufacturer, noted that although U.S. demand is stable, the Far East remains slow. Domestic Indian demand improved slightly as a consequence of better retail activity.

Samir Prabhu, head of business development at Vishal Diamonds, a diamond jewelry manufacturer, said the show was slow for diamond jewelers and diamantaires because there is still some caution in the retail sector. Jewelry retailers are still holding diamond inventory, he added.

Diamantaires continue to express concerns about profitability in the sector with high rough prices paired with slow polished demand. Diamond manufacturing in India has been cut by about 40 percent as manufacturers reduced their rough purchases and many cautioned that companies will be forced to lay off large amounts of workers if the current situation persists.

Few expected that IIJS would change diamond market conditions and are looking toward the September Hong Kong Gem and Jewellery Fair as a better indicator of their prospects in the upcoming U.S. and Chinese holiday seasons. Most exhibitors in the diamond pavilion agreed that IIJS is less about selling diamonds and more about networking with existing and potential clients in the domestic market.

“We don’t see huge transactions at the show and the idea is to generate orders from the show in the coming months,” said Anand Shah, vice president of sales at Asian Star, a diamond manufacturer. “But visitor traffic was good and there was at least a feel good factor for the local market.”

This year the Diwali festival begins on November 11 with the subsequent wedding season regarded as a busy period for buying gold and gold jewelry.
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Tags: Avi Krawitz, diamonds, GJEPC, gold, IIJS, jewellery, Jewelry, Rapaport
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