India drove global Q2 jewelry demand growth
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.