Thursday, March 31, 2011

Constant rise in diamond prices a concern



In the past two years, the prices of some categories of low-end roughs have risen by 300 per cent.

A sustained recovery in the prices of unprocessed (rough) diamonds over the past two years is causing concern for processors and jewellers.

Due to a recovery in demand since the global recession, the prices set by Diamond Trading Corporation, the world’s largest producer-cum-purveyor of rough diamonds, is now above the levels which prevailed before the onset of the economic crisis.

DTC is the marketing arm for roughs of the South Africa-based De Beers Group, which has 45 per cent of the global market. In the past two years, the prices of some categories of low-end roughs have risen by 300 per cent. Some in a premium category have risen 150 per cent.

With 600,000-700,000 workers, India’s diamond processing industry handles nine in every 10 of diamonds mined anywhere in the world.

A slump in sales of diamond jewellery would hit hard, which is why there is concern at a continuous rise in prices of roughs.

It is possible, for instance, that consumers in growing markets such as China or India may then prefer to buy jewellery with reduced diamond weight.

Part of the reason for the global rise in demand till date is the part-recovery in the US economy. The US takes close to 40 per cent of global jewellery sales.



roughs considerably, by 34 per cent, to about 34.5 million carats.

Sales of roughs by DTC were $5.1 billion in 2010, against $3.23 bn the previous year. Traders say a further rise is needed for prices to correct and to give another boost to retail demand.

Said a DTC official, “The first half of 2010 saw strong recovery in demand for rough diamonds from sightholders (the authorised purchasers), which continuedin the second half, with increased demand from retail markets, particularly India and China, which showed remarkable rates of growth of polished (diamond) wholesale prices up 31 per cent and 25 per cent, respectively (in local currencies). Further confidence was driven by a strong US Christmas sale season, up by approximately seven per cent from the previous year.”

Source: business-standard

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