Mining disruptions in South Africa have led to a huge scarcity of low-end rough diamonds in India, and this has resulted in a rise of 10-12 per cent in prices in the last two months. The segment hit the hardest is diamonds of size 10-50 cents, which saw robust consumer demand during the wedding season.
It is expected diamond prices would normalise in the lean season beginning June.
Mining at De Beer's
Venetia mine in South Africa, the biggest in that country, saw
disruptions early this year, owing to heavy rains followed by
devastating floods at the mine site. Mining has been resumed, albeit at a
moderate pace, and De Beers hopes operations at the mine would return
to normal in the second half of this year, helping the company maintain
production at least year's levels. Last year, the company produced four
million carats of diamonds in South Africa. Of these, three million
carats were mined at Venetia.
"Availability of rough diamonds between 10-50 cents was scarce in the
last couple of months. Consequently, prices of both rough and polished
diamonds in this segment rose five to six per cent in the last 15 days.
Overall, prices of rough and polished diamonds have risen 10-12 per cent
in the last two months," said Umesh Parekh, managing director of
Kolkata-based Shree Ganesh Jewellery House.
After a staggering 57 per cent rise in import of rough diamonds in
December 2012, imports fell sharply in the three subsequent months.
However, in April, imports rose 18.48 per cent, as Indian jewellers
rushed to bridge the deficit created by the robust demand. Despite a six
per cent rise in overall rough diamond imports, jewellers were ready to
pay premium to secure supply from independent buyers.
At 6.4 million carats, De Beers, which controls about 40 per cent of
global rough diamond supplies, recorded a three per cent rise in rough
diamond production in the quarter ended March. Varda Shine,
executive vice-president of De Beers Global Sightholder Sales, had
recently said this year, the company's rough diamond output would stand
at last year's levels.
"Now, there is a shortage of rough diamonds. But looking at the lean
season ahead, the shortage is unlikely to affect jewellers' business,"
said Mehul Choksi, managing director of Gitanjali Gems, one of India's largest branded jewellery manufacturers and retailers.
In the ongoing wedding season, overall jewellery sales rose 25-30 per
cent. As the wedding season accounts for about half of jewellers' annual
sales, business during this season points to their prospects during the
rest of the year.
Choksi said the rising diamond prices compensated for the fall in gold prices, and this helped Gitanjali Gems keep jewellery prices unchanged.
Meanwhile, jewellers have refrained from fresh bookings, amid
expectations of lean sales during the coming monsoon season. For the
festival season, fresh orders are expected to start in July.