Diamond Jewelry Consumption Rising

RAPAPORT… The Associated Chambers of Commerce and Industry of India (ASSOCHAM) predict that gold and diamonds will continue to drive jewelry growth in the domestic market, pushing jewelry demand to $20 billion by 2010 and $30 billion in 2015. If that is the case, then India should very soon see a rise in the domestic consumption and demand for diamond jewelry.

Industry News

Highlights for October included the buyer-seller meet organized by the Gems and Jewellery Export Promotion Council (GJEPC) with nine top U.S. retailers and the 34th annual GJEPC award ceremonies that recognized contributions to the industry. Besides this, the dollar continues to weaken, a worry for Indian players for reasons ranging from recovery of payments to the slowing demand from the U.S. market.

The appreciating rupee, for once, has had a beneficial impact on the totally import-based gems and jewelry export industry, which was able to generate a 27 percent export growth to $9.4 billion during the first half of the current fiscal year, as compared to $7.4 billion in the corresponding period of 2006. During a press conference organized in New Delhi, Sanjay Kothari, chairman of GJEPC, said that industry exports totaled $17.1 billion in fiscal 2006-07 against $16.7 billion in 2005-06, showing a growth of 2.6 percent. He added that cut and polished diamond exports were $10.9 billion in 2006-7, while gold jewelry exports fetched $5.2 billion. Colored stones accounted for exports of $246 million last fiscal, against $232 million in 2005-06. In discussing the share of exports generated by diamonds, Kothari, said that diamonds accounted for 64 percent of the total export of gems and jewelry, gold accounted for 30.47 percent and colored gemstones and “others,” 1.44 percent and 1.04 percent, respectively, last year.

Slow Christmas Predicted

The industry is expecting a slack Christmas season in the U.S. this year because of the subprime market problems and further weakening of dollar against the rupee. That could mean the diamond industry in Surat is heading for a long vacation this Diwali — the longest in the trade’s history. According to industry experts, it is also believed that inventory levels in the industry are going up because of the weakening of the dollar. According to a news report in The Economic Times, most of the manufacturers-cum- exporters have sold only 40 percent of the stock and the rest is lying in the stores. Rough estimates from leading industry players say that inventory levels could be almost $10 billion.

On the subject of diamond consumption in India itself, ASSOCHAM President Venugopal N. Dhoot forecast that diamond jewelry consumption is likely to jump nearly 80 percent in 2010 and more than 95 percent between 2010 and 2015. In a seminar organized in New Delhi, Union Minister of State for Mines T.Subbarami Reddy stated that the Indian Central Government had decided to stop the import of gold and diamonds within the next ten years and emphasize the domestic exploration of diamonds and gold in the nation’s five mining states.

Bridal Business

In discussing demand for diamond bridal jewelry in India, Jay Mehta from Goldiam said, “The shift is gradual and slow when we talk of [moving from] gold to diamond jewelry, Only the urban and upper segment of the social economic class considers bridal jewelry as diamond jewelry, The rest of India is still high on plain gold and kundan and this mainly because of the affordability factor.”

Reiterating that view is Tejas Soni from Raa Diamonds who said, “Yes, there is a big shift when it comes to building jewelry consumption in India. At least among the urban population, females prefer diamond jewelry over gold, and the tier II cities also prefer diamond jewelry. But, since the majority of the Indian population resides in the rural areas, there is not much awareness of diamond jewelry yet. That awareness will come in another five years.” In terms of demand, Soni said “Bridal jewelry in India is considered an investment. Hence, VVS quality with F/G color and excellent cut is always in demand.”

Soni and Mehta both were of the opinion that U.S. consumers prefer diamonds for casual wear and Soni said that in the bridal category, only designer diamond bridal jewelry was doing well in the U.S.

The Marketplace

• -2 is in excellent demand with shortages across the board.
• Demand has improved for +4 sieve in stars and demand is excellent for melee, with shortages persisting.
• Demand has improved for 0.08 to 0.18 carats in SI goods. VVS and lower piqué are stable.
• Movement has improved for 1/5 and 1/3 in SI goods.
• Overall demand and supply are good for 0.50 carats.
• Demand is good for 0.70- to 0.80-carat collection goods and I1 to I2 goods.
• 0.90 to 0.99 carats are very hot, with shortages for collection goods.
• 1 to 1.99 carats are moving across the board, with shortages for premium sizes.
• 2 carats are stable.
• Shortages are reported for 3 carats+ in rounds and fancies.
• In fancy shapes, demand is big for 1.50 carats+/VS+/I+ in princesses, pears, marquises and ovals.
• Demand is also strong for small goods under 0.50 carats in pears and marquises.