Polished Prices, Production Levels Hinge on Diwali Sales
Polished diamond prices and
supply levels hinge on how well diamonds sell over Diwali. A good
showing could see prices moving upwards by the end of the month and
timely production restarts after the vacations. There is guarded
optimism as the run-up to Diwali has been fair.
has been ‘routine’ with none of the customary demand increase just
before the festival. But diamond prices, the rupee-dollar exchange rate
and both domestic and international demand have remained stable for some
market was literally on the verge of complete panic a few months ago as
demand tapered off sharply and polished prices tumbled while rough
remained relatively expensive. De Beers subsequently reduced rough
prices, the currency exchange rate steadied and domestic demand picked
All will be well if consumers buy enough diamond jewelry to match the current flow through the diamond pipeline.
have been some indications that Indian consumers are trading up in
quality. Domestic demand has picked up for some of the better colors and
clarities. Where demand was previously for the VS-and-below clarities,
it has now moved upward into VVS territory.
are acutely aware that current prices are being sustained by a
production shortfall. Given that the last two De Beers Sights have been
large ones, there is currently no shortage of rough in the market. The
current Sight is widely expected to include a large supply of lower
color and clarity diamonds. Depending on how big the Sight is, it might
significantly increase the rough overhang in the pipeline.
After showing signs of steady growth, Indian traders are not sure the U.S.
market will offer much growth, especially in light of the damage from
Storm Sandy and the Presidential elections. Thus, the performance of the
domestic market over Diwali has become even more crucial for Indian
in festival demand will, apart from triggering a price decrease, almost
certainly result in factories not reopening promptly after the
vacation. Production units have rough diamond inventories purchased at
prices that require polished price levels to be sustained in order to be
production slowdown will in turn have supply implications for overseas
Christmas demand as well as that for the domestic wedding season at the
end of the year.
production units and the Mumbai trading market will shut down for the
Diwali vacations by November 10. Most serious trading will taper off by
November 8. The market is scheduled to resume operations by November 28
but a lot depends on what happens over the festival sales period.