RAPAPORT... The holiday season in India seems to have had little effect on the diamond industry in the country and the slowdown in the market continues. Along with the problems faced by the American economy, the rising price of gold and the fluctuation in the stock market seem to be adding to the worry. On the upside, the ongoing marriage season is helping to boost jewelry sales and keep retailers and manufacturers of jewelry busy.
“The market has been very good for the past month,” said Ami Gupta, vice president of sales, Kama Jewellery (India) Pvt. Ltd.
Chirag Mehta, director, Adams Jewellery Pvt. Ltd., is in agreement. “We specialize in earrings and other everyday-wear kind of jewelry and the market for those products is fast-moving as of now,” he said. As a result, retailers in the market are stocking more small pieces than heavy jewelry, according to Mehta, but he added that his direct interaction with customers at one of the recent local exhibitions led to a good sale of bigger pieces as well.
In terms of diamonds, Manthan Salvi from Fancy Diamonds India Pvt. Ltd. said, “1- to 3-carat diamonds are doing very well and fancy cuts are showing good demand as well.” Paras Mehta, vice president of sales, Dimexon Diamonds Ltd. added that “The demand is for better end round and round fancies, especially in VS-plus goods and in all colors and all sizes. For the rest of the goods, there is little or no demand.” Sanjay Shah, director, Gold Star Jewellery Ltd. said he sees “demand shifting to G to J color, SI1+ to VS1 and increasing demand in 0.50 to 3 carats.”
Smalls SlowRegarding market dynamics, Shah said, “We have seen good movement in larger goods and better goods, but in piqué and small sizes below 0.50, it is very slow. The stock is piling up and manufacturers are losing money on it. As for the jewelry front, we see that high-end jewelry buyers are a little bit hesitant in their purchases. They are not able to absorb the new increase in prices and are shifting to smaller goods of 1 to 2 carats rather than larger 3 to 5 carats.”
The market is also seeing a shift in the preference of Indian customers with regard to their choice of stones, according to Paras Mehta. “Due to the increase in polished prices and the weakening of the rupee against the dollar, Indian retailers cannot pay higher diamond prices and that is why they are shifting to semiprecious and colored gemstones.” Many industry players feel that for Indians the tilt is still toward white diamonds. Explaining the rationale behind this, Chirag Mehta said, “India is still a very investment-oriented market and people here are not so brave that they want to experiment with colored diamonds because they are worried about the value these stones might have in the future.” But Paras Mehta feels that, in the near future, the market for colored stones will pick up, since they provide an alternative for people who find it difficult to invest in diamonds because of the high prices.
Record Rough PricesIn discussing rough and polished and their demand and supply, Parash Mehta said, “There is a lot of speculation on the rough side, and the rough prices for the better end of goods are getting more and more expensive every day. It is difficult to achieve that kind of price rise in polish. In today’s market, there are record rough prices. To pass these kinds of rough prices down the value chain into polished is getting more and more difficult, especially with America in a recession. A correction, if it happens, will not come much before 2009. A lot of people are hopeful that America will be in a better position in the last quarter of 2008 and, if that does not happen, then I see a big correction in rough prices. Today, the way the money market is, banks do not trust each other for money so they will definitely not trust the jewelry and diamond industry.”
Talking about the JCK Las Vegas show, Parash Mehta commented that “We have tied up with Memoire for Jewellery and we expect America to buy in the last quarter of 2008, as this year has been slow so far.” Shah is not too optimistic about the show, noting “Our expectations are low. We have cut costs and are sending fewer staff than before. We have changed our business plan and are going to target independents more. We have reduced our dependency on big players.”
Marketplace • Activity in the polished market was comparatively slow in May since most
companies have shut down trading operations until the start of the summer
holidays the first week of June.
• The depreciation of the Indian rupee against the U.S. dollar has created
further uncertainty in local market transactions, leaving dealers hoping for
a stable dollar.
• The main demand in the local market is for small goods — stars and
melees — with severe shortages in these categories across the board.
• Overall demand is stable across the board for goods smaller than 0.18
carats.
• Big manufacturers are busy preparing for the JCK Las Vegas show,
hoping to sell their inventory of better 1-carat+ goods and fancy colored
diamonds.
• Activity is better in SI category for goods above 0.50 carats in J+.
• Demand is stable for better 1-carat+ goods in SI1+/I+.
• There are shortages in large fancies across the board.
Article from the Rapaport Magazine - June 2008. To subscribe click here.