De Beers price hike adds to diamond industry woes

As feared, De Beers increased the prices of its rough diamonds in a tight market, adding to the woes of the Indian cutting and polishing industry, which was reeling under the pressure of reduced imports from Russia.

Diamond mining giant De Beers increased the prices of its smaller diamonds by 5 per cent to 7 per cent at its sale this week in Botswana, according to a Bloomberg report. The industry thinks that the supply shortage from Russia could have fuelled the price hike by De Beers.

Most of the small diamonds mined in the world come to India for processing. So, the price hike will have an immediate impact on the cash flow of the polishing units and also could affect the demand at the consumer-end.

The industry is already affected by the slower imports from Russia. Almost 27 per cent of rough stones are imported from Russia. Russia’s Al Rosa, a major diamond miner, is a big supplier to the Indian industry.

“The work in the polishing units of Surat has been affected. Most of the units are working two hours lesser than normal times due to lesser stock. Some of the units are providing two days’ holiday a week. They have not reduced their labour force yet,” said Dinesh Navadiya, regional chairman, Gujarat, Gems and Jewellery Export Promotion Council.

However, if the RussiaUkraine war persists and the import of rough stones from Russia remains affected, the industry may see job losses in the diamond polishing sector. “If the raw material stocks deplete the industry will be left with no other option,” he said.

Meanwhile, the imports of gold surged in May. India imported 101 tonnes of gold in May, compared to 13 tonnes in the same month last year, a growth of over 600 per cent. In value terms, May imports surged to $5.83 billion from $678 million a year ago, said a Reuters report.

Gold imports grew multi-fold even sequentially. In April, the country had imported 27.1 tonnes and the shipment grew 272 per cent in May.

According to an industry expert, many traders have been making use of the price correction in the metal in May to build their inventory. After a good Akshaya Tritiya, the trade needed to replenish their stocks. Further, duty refund scrips received from the government too would have supported the imports.