In­dia drove global Q2 jew­elry de­mand growth

Banking Frontiers - - Research Notes - Gold -

In­dia was the main contributor to the 8% gain in Q2 in global jew­elry de­mand, as it re­cov­ered from ex­tremely low 2016 de­mand. The global de­mand of 480.8 tonnes was 8% higher yoy, but Q2 2016 was it­self very weak; de­mand re­mained well be­low the five-year quar­terly av­er­age of 586.2 tonnes. The H1 de­mand grew 5% from the very low lev­els of 2016, but at 967.4 tonnes.

In­dia drove the de­mand growth al­most sin­gle-hand­edly. De­mand shot up to 126.7 tonnes com­pared with just 89.8 tonnes in Q2 2016. De­mand was boosted by fes­ti­vals, wed­dings and im­proved ru­ral sen­ti­ment. Es­ti­mates sug­gest that Ak­shaya Tri­tiya-re­lated sales were up by around 30 % yoy. Ru­ral sen­ti­ment im­proved fur­ther as the gov­ern­ment con­tin­ued to re­place the cur­rency. The greater liq­uid­ity has boosted ru­ral pur­chases, along with a good mon­soon rain­fall and the pos­i­tive im­pact of a higher num­ber of aus­pi­cious wed­ding days in the Hindu cal­en­dar (26 aus­pi­cious days in Q2 this year, com­pared with just 8 in Q2 2016).

Out­look is muted for H2. The new 3% GST is likely to cause some short­term dis­rup­tion. The mar­ket en­vi­ron­ment should be­come more set­tled to­wards the end of the year. This should be help­ful for gold de­mand – par­tic­u­larly as the key Oc­to­ber fes­ti­val sea­son ap­proaches. Mean­while, the Gem & Jew­elry Ex­port Pro­mo­tion Coun­cil (GJEPC) has signed a MoU with Di­a­mond Pro­duc­ers As­so­ci­a­tion (DPA) and will spend over `2 mil­lion for pro­mo­tion of di­a­monds in in­ter­na­tional mar­kets. The in­dus­try needs at least $100 mil­lion next year to make an im­pact on the world mar­ket, ac­cord­ing to Praveen­shankar Pandya, head of GJEPC. Ac­cord­ing to Jean-Marc Lieber­herr, CEO of the DPA, it plans to roll out a cam­paign in In­dia from Oc­to­ber 2017, which would tar­get the lo­cal mar­ket and fo­cus on the cus­tom of ar­ranged mar­riages.

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