Fashion

Indian diamantaires seek pause on rough stones’ supply, Retail News, ET Retail


Mumbai|Kolkata: Indian diamond houses have reached out to De Beers, Alrosa, Rio Tinto and other leading miners to persuade them to temporarily halt the sale of rough stones amid dwindling demand from affluent markets, tight monetary policy, unsettling geopolitics and sanctions, and a new craze for cheaper lab-grown diamonds that is nibbling at the market for natural stones.

Indian diamantaires, whose skilled craftsmen cut nine of 10 stones mined in the world, had made a similar move in 2008 to stabilise the market in the wake of the global financial meltdown.

The first to respond to the recent appeal is the Russian miner Alrosa. On Tuesday, Alrosa communicated to the industry body of diamantaires and jewellers its decision to stop the allocation of rough diamonds in September and October 2023. “We can understand the supply-demand situation and will fully cooperate with the industry,” Jim Vimadalal, Alrosa’s India head, told ET from Hong Kong.

A week ago, industry officials also held a meeting with De Beers, the world’s largest miner, on September 13 to put across their point.

A letter by Vipul Shah, chairman of the diamantaire lobby, Gem & Jewellery Export Promotion Council (GJEPC), earlier this month to miners, captures the plight of natural diamonds. De Beers is understood to be examining GJEPC’s proposal.

A rough diamond selling at $2,500 per carat at the start of 2022 is now going for $1,750, with demand plunging in the US and China.

The Russia-Ukraine conflict and trade disputes, coupled with sanctions on import of Russian rough diamonds imposed by G7 countries are threatening to disrupt supply-chain and impact pricing, Shah felt. Also, according to him, the market for natural diamonds, especially the larger stones and engagement rings, has been significantly impacted by the growing presence of lab-grown diamonds.

The lab-grown or artificial diamonds, sold at one-third the price of natural diamonds, are made by recreating in labs the temperature and pressure existing deep in the bowels of the earth.

LIGHTER PIPELINE, LESS LEVERAGED
The overall gross exports of cut and polished diamonds between April and August of FY24 was $ 7028.31 million – a decline of 30.27% from $10079.94 million in the year-ago period. The import of rough diamonds has also dipped to $6428.13 million during the period from $7865.40 million during the same period of the previous financial year.

To many outside the trade, a congeries of unrelated forces – geo-politics, changing buyers’ preference, and emergence of synthetic replicas – may have put the age-old trade at the cross-roads. But the insiders haven’t lost hope. Over the last 18 months, the industry, said Shah, has undergone a “period of self-correction and rebalancing, resulting in a lighter pipeline”. Also, unlike 2008, the industry is far less leveraged.

According to Rowley of De Beers, “Global consumer demand for diamond jewellery reached all-time record levels in 2021 and 2022, and while demand has been softer in 2023 as a result of macroeconomic challenges, underlying consumer desire for natural diamonds remains very strong. To support customers, De Beers continues to provide sight-holders with rough diamond supply flexibility and is investing an additional $20 million in natural diamond marketing over the end-of-year festive season in key consumer markets to support the opportunities for diamond jewellery sales.”

  • Published On Sep 21, 2023 at 08:15 AM IST

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