|
|
China’s Diamond Trade Weighs Virus Effect
Feb 25, 2020 8:58 AM
By Joshua Freedman
|
|
|
RAPAPORT... Chinese retail is almost dead, the country’s bourses are quiet, and even importing rough goods has been fraught with obstacles. Diamond dealers expect a release of pent-up demand when the coronavirus goes away, but for now, all they can do is manage a difficult situation.
“There is always demand for diamonds in China, but currently consumers can’t go shopping, [as] hardly any shopping malls [are open],” said Lin Qiang, president of the Shanghai Diamond Exchange, in an email to Rapaport News Monday. “When the epidemic is over, the backlog of demand will be unleashed.”
While the bourse has been open since February 10, when authorities permitted businesses to restart, many people have elected to work from home. Some have had to self-quarantine if they’d been traveling.
“Most members are still not at work — especially foreign members,” Qiang noted. “Our Indian members are still in India. Even if they came back at the end of this month, they would have to stay at home under quarantine for 14 days. Therefore, we think that business will return to normal in mid-March at the earliest.”
In the meantime, officials at the building have been taking people’s temperatures and implementing other measures to stop the virus spreading, he said.
Concerns about the health situation escalated during the Lunar New Year period, when Chinese consumers traditionally travel and shop. As well as cutting the selling season short, the outbreak led to companies prolonging their closures due to enforced restrictions and the lack of luxury demand.
“The traditional shopping season for diamonds and jewelry did not happen this spring,” commented Liang Weizhang, general manager at the Guangzhou Diamond Exchange in the Guangdong province. “Stock is a big challenge for the companies, from brands to wholesalers, [and] they may cut their purchasing budget in the first quarter.”
Tight border controls have “played havoc” with China’s ability to import rough entering via Hong Kong, the Guangzhou exchange said in a statement last week. This created challenges for Guangdong’s large manufacturing sector, which accounts for 75% of China’s rough processing.
The exchange, working with customs officials, set up a fast channel enabling clearance of all goods within a few hours, it said. However, the general disruptions have hampered traders’ ability to carry out normal business. Most bourse members went back to work last week, but many people are staying indoors, Weizhang said.
“The current market is still quiet due to the difficulties of face-to-face business gathering,” he continued.
Nonetheless, he predicted “retaliatory growth” after the epidemic is over, and said the outbreak in China was under control.
Hong Kong challenges
Diamantaires with Hong Kong offices have also suffered, as the city is an important trading hub supplying goods to the mainland, as well as being a key retail market in its own right. Tourism from China has ground to a halt as visitors have to spend two weeks in quarantine. The organizers of the Hong Kong International Diamond, Gem & Pearl Show and the Hong Kong International Jewellery Show have rescheduled both March events to May, while traders are unsure how successful the delayed fair will be.
The situation could impact Mumbai-based suppliers’ credit profiles, as China accounts for 36% of India’s diamond exports, according to Crisil, a ratings agency owned by Standard & Poor’s.
“Share of diamond exports to the region has been declining for some time due to reasons other than coronavirus,” Crisil said in a report earlier this month. “Nonetheless, rescheduling of the Hong Kong International Jewellery Show and [the coronavirus] will adversely impact exports and dampen the domestic industry in [the fourth fiscal quarter ending March 31].”
And amid the crisis, several Indian polished manufacturers have been getting by with smaller Hong Kong teams.
Among them is Sunrise Diamonds, a local unit of Mumbai-based manufacturer Shairu Gems Diamonds. Almost all of Sunrise’s Indian workforce went home for the Chinese New Year and chose not to travel back, and will return when the situation normalizes, a source at Shairu said.
“Business has totally stopped,” another worker at Sunrise observed last week. “The situation is bad — nobody wants to come. It’s day by day getting worse.”
Dharmanandan Diamonds, another Indian cutting firm, said four of the 11 Indians in its Hong Kong office stayed in their home country after the holiday. The rest of the team comprises locals, according to Vipul Sutariya, the company’s director of sales and marketing.
“We are open, but activity in Hong Kong is very limited most of the time,” Sutariya said in an email. However, Chinese clients are beginning to open their businesses again, he noted.
Kiran Gems’ offices in Hong Kong and China also closed temporarily, and most of its workers returned to India, according to a report by Indian newspaper The Economic Times that Rapaport News was not able to corroborate.
Aside from the Hong Kong shows, the outbreak has caused the postponement of the Antwerp Rough Diamond Days, which were due to happen this week at the city’s Antwerpsche Diamantkring, according to a local official.
In addition, only a small number of Chinese buyers will attend the Bangkok Gems & Jewelry Fair this week, predicted Julius Zheng, principal at Polaris Jewelry & Service Company. It’s unclear how the situation will play out in the coming months, he added.
“The [May] Hong Kong show will be a [test] of the trading sentiment,” Zheng said. “The purchasing will not be at the level of the 2019 March Hong Kong show, and it will take a few months for the business to be fully restored.”
Image: China customs officials inspecting a batch of rough diamonds. (Guangzhou Diamond Exchange)
|
|
|
|
|
|
|
|
|
|
Tags:
Antwerpsche Diamantkring, Bangkok Gems & Jewelry Fair, China, Chinese New Year, Coronavirus, Crisil, Dharmanandan Diamonds Gem & Pearl Show, Guangdong, Guangzhou Diamond Exchange, Hong Kong, Hong Kong International Diamond, Hong Kong International Jewellery Show, Joshua Freedman, Julius Zheng, Liang Weizhang, Lin Qiang, mumbai, Polaris Jewelry & Service Company, Rapaport News, Shairu Gems Diamonds, Shanghai Diamond Exchange, Standard & Poor’s, Sunrise Diamonds, the Antwerp Rough Diamond Days, Vipul Sutariya
|
|
|
|
|
|
|
|
|
|
|
|
|