Efforts by the Indian diamond industry to wrest more rough
supplies from Russia ran into heated opposition from the Association of Diamond
Manufacturers of Russia (ADMR), which says Russian cutters need the rough for
themselves. In an April letter to India’s Gem and Jewellery Export Promotion
Council (GJEPC), ADMR said it is unfair of India to demand an increase in its
supply of Russian rough because it would come at the expense of Russia’s
domestic cutting industry, which is itself short of rough.
In a more amicable exchange, the first Indo-Russian Diamond
Summit gathered 15 leading Indian diamond manufacturers and 20 of Russia’s
largest jewelry companies together in Surat for three days of professional
meetings, diamond viewings, visits to polishing factories and round table
discussions. The April 3 to 5 summit was organized by GJEPC and the Moscow
Diamond Bourse. Companies from both countries are interested in increasing
their business dealings with each other and the summit was seen as an
opportunity to meet face to face to begin to establish business relationships.
STRIKE ENDS, SHOPS REOPEN
The 21-day strike by the jewelry industry against the
recently proposed tax and duty increases ended with assurances from the Indian
Finance Ministry that the proposals will be reviewed. A press statement by the
All India Gems and Jewellery Trade Foundation (GJF) released a letter dated
March 30 that it had received from the Tax Research Unit (TRU) of the Ministry
of Finance promising that the issues raised by GJF in its criticism of the
proposed taxes were under examination by the Central Board of Excise and
Customs.
In the meantime, TRU said tax officials will be instructed
not to compel any jeweler to register for excise and to allow jewelers to
peacefully reopen their businesses without any interference from the excise
department. The nationwide strike was called March 17, one day after the Union
Budget proposals that would have doubled most jewelry and gold taxes were
announced.
FORECASTING THE FUTURE
“I am not too optimistic about this year turning out any
better than 2011,” said Sanjay Shah, director of Gold Star Diamond Pvt. Ltd. “I
expect the polished prices to increase by a few percentage points in the coming
months, which will again hurt the consumers, whose spending power is going down
because of the heavy inflation being witnessed by the country. Also, gold
prices are expected to move closer to $2,000 in 2012 and that, too, will hurt
the consumer in the end.”
Shah said he feels “that the U.S. will once again emerge as
a bigger player compared to India and China. I’m not sure the growth in India
will be much and I think China may grow more than India.”
In regard to market sectors, Shah said that “In jewelry, we
expect bridal to do better than fashion due to the price concerns. With the
price of gold and platinum going up, the fashion jewelry in gold and platinum
is being replaced by silver jewelry. As for loose diamonds, I expect SI to be
stronger in .50-carat goods priced in the range of $200 to $500. Inexpensive
goods will be harder to sell because those consumers are buying silver cubic
zirconia (CZ) products.”
“Overall, the market moved with great confidence due to
stable sales in the first quarter of this year,” said a representative from
Venus Jewels. “Round 4-caraters-and-above in flawless to VVS clarity goods are
available at reasonable prices at the moment, so it is a good opportunity to
source these diamonds. High-end goods like flawless and D color have moved, but
only at reasonable prices.” Vipul Shah of Shree Ramkrishna Exports said that
“Currently, we see rounds and cushions moving well, particularly triple EX, VS
and SI.”
LOOKING TO LAS VEGAS
There are high expectations for this year’s trade and
consumer shows, especially the summer’s JCK Las Vegas show. The Venus Jewels
representative said the company would be exhibiting at Las Vegas. “This year,
we are expecting to meet new clients not only from the U.S. but also from all
other major markets, including some markets where we have not yet done
business. Our goal at the show also is to further establish ourselves with the
downstream customers.”
Shah said Gold Star also will be attending JCK “but we don’t
have great expectations because the world economy is still slow. We are
witnessing India and China slowing down. Business being up by a few percentage
points does not mean anything when the gold and diamond prices have jumped by
double digits. The major issue is that industry players are trying to grab
clients by offering jewelry at discount prices, rather than by creating new
consumers. We are seeing there has been a significant drop in consumers at
retail. If we can begin to drive retail, we will all have great business to
cheer about.”
THE MARKETPLACE
- Activity in the domestic retail market shut down during
the 21-day strike by jewelers against proposed tax increases and new taxes on
gold and jewelry.
- The jewelers’ strike caused a liquidity crisis in the
local market.
- Demand for small goods remains strong for stars, with weak
activity reports for -2 and melee goods.
- Buyers are showing some resistance to higher asking prices
and retailers are not restocking.
- Overall overseas demand remains stable from the Far East
and U.S. markets.
- Demand for SI goods remains high in all sizes.
Article from the Rapaport Magazine - May 2012. To subscribe click here.