Diamond prices up by 2-5% in three weeks

Prices of rough and polished diamonds have jumped by 2-5 per cent across all varieties in the past three weeks.

Diamond-processing activity in India had gone down early this year and revived later with the positive outlook on the Indian economy.

Also, the wedding season demand, coupled with the stagnant gold prices, has boosted jewellery demand among local consumers. Normally, jewellery demand goes down with the end of the wedding season, which is over by the end of May.

Rural demand, which consists of around two-thirds of India’s jewellery consumption, fades with the onset of the monsoon because farmers switch to buying seeds and fertilisers. But, consumers continued buying ahead of the goods and services tax (GST) roll-out, which, it is feared, will make jewellery costlier. “The domestic demand for rough and polished diamonds has been fairly good in the last few weeks. Hence, the prices of both rough and polished diamonds have risen by 25 per cent across all categories,” said Pravin Nanavati, joint secretary, Gujarat Heera Bourse.

The price rise during the current lean season is unusual because consumers normally stay away this time from fresh purchases. In the United States, the largest consumer of precious ornaments with a global market share of 42 per cent, jewellery demand remains subdued before consumers start coming back to the showroom in July.

Since then, however, robust demand continues in the United States throughout the year.

“Indian consumers normally start preparations with new designs and collections from July, which marks the beginning of the season. But, jewellery demand remained fairly good both in India and overseas. Meanwhile, the profitability of diamond processors is under tremendous pressure. Hence, they have adjusted the price to claim profitability,” said Praveen Shankar Pandya, chairman, Gems and Jewellery Export Promotion Council.

Meanwhile, with global economic uncertainty reducing gradually, consumers are coming back to buy luxury items including precious ornaments. Consequently, India’s gems and jewellery exports jumped by 8.95 per cent in 2016-17 on recovery in demand in the United States, Hong Kong, and the United Arab Emirates (UAE), the three destinations accounting for over 75 per cent of India’s overall shipments of precious ornaments by value.