RAPAPORT…
The economic news from the U.S. in recent months was not
good by anyone’s standards but there was one positive result: a correction in
the price of rough. “In the past month or so, we have witnessed a correction of
about 10 percent to12 percent in the price of rough and 5 percent to 7 percent
in the price of polished,” said Vasant Mehta, past chairman of the Gem and
Jewellery Export Promotion Council (GJEPC). “This is good, as it will help
regain industry confidence. As far as demand for goods is concerned, there is
movement but not as much as expected.”
There was some question as to whether the domestic economic
problems in the U.S. would delay or otherwise interfere with payments to Indian
vendors. “We have not seen any problems,” said Mehta. “No one in the industry
has complained about buyers from the U.S. asking to extend their credit
period.”
Rajiv Jain, chairman of the GJEPC, added that “The demand
from the U.S. has been stable — there is no reason for the industry to panic
and draw any sort of comparison with the situation we faced in 2008 – 2009
where we saw sluggish demand from the U.S.”
Sanjay Kothari, vice chairman of GJEPC, added, “There’s no
doubt Standard & Poor’s (S&P) downgrade of the U.S. credit rating
caused a worry in the industry. But seeing the latest data from the U.S.
government, I am confident that the industry players in India have breathed a
sigh of relief.”
Demand at the Low End
That sigh of relief over the U.S. situation did not,
however, translate into positive market movement. “There has been steady demand
for low-quality goods but, apart from that, there has not been any major
movement of goods,” said Jain. “We are expecting to see some positive demand
for diamond and diamond jewelry in the first week of October as far as the
domestic market is concerned.” Speaking before the start of the all-important
Hong Kong show, Kothari said that “All hopes are now pinned on the Hong Kong
show and we are expecting some positive activity to take place as far as demand
for goods is concerned.”
The soaring price of gold hasn’t helped with sales. In fact,
“the fluctuation in the price of gold has caused anxiety in the industry,” said
Jain. “Not only is the industry shying away from stocking up its inventory, but
the customers seem to have put a hold on their jewelry shopping as well. We are
hoping that the Diwali holiday in India in November will see some activity as
far as the sale of jewelry is concerned.”
Rough shortages that have been a concern in the past have
been somewhat resolved by the recent clearance of Zimbabwe diamond shipments.
“The first lot of goods that passed the Kimberley Process (KP) certification
has been received in India. We now await clearance of the remaining goods as
well,” said Jain.
Colored Gem Show
The industry in India is looking forward to the
International Colored Gemstone Mines to Market Conference, which is scheduled
for November 2 and 3, 2011, in Jaipur. The conference site, following the 2010
conference in Mumbai, reflects Jaipur’s dominant position globally in
manufacturing colored gemstones. Organized by GJEPC, the event is designed to
reinforce India’s position as the worldwide hub for colored gemstones.
According to Jain, the conference will bring together experts from various
countries to address the present state of the global gemstone industry and also
suggest a way forward.
On a more glamourous note, Surat will host the 38th edition
of GJEPC’s awards event on October 11, 2011. Awards will be presented in
recognition of the excellence and meritorious performance of exporters, brands
and companies alike. There are 30 different award categories, including exports
of diamonds, precious metals jewelry, gemstones, costume and fashion jewelry,
in addition to awards for banks and importers.
In other promotional activities, GJEPC is discussing the
possibility of hosting an Indo-China buyers meet by the end of 2011 in
recognition of China’s growing importance as a buyer and supplier for gems and
jewelry.
Tax Trouble
The issue of black money — untaxed, undisclosed assets
— in India has long been a concern, but there are indications that the
government is launching new efforts to track the secret bank accounts.
Succumbing to the pressure from India and various global forums, Belgium has
reportedly agreed to provide information held by its banks and financial
institutions to India, according to the Business Standard newspaper.
The move is likely to help the government track black money
parked by Indians in Antwerp, Belgium — a diamond trading hub. Antwerp is the
center of the global diamond business and many families from Gujarat are
involved in diamond trading there. Earlier in 2011, the Indian government
served notices on 17 citizens for allegedly stashing money in secret bank accounts
in the LGT Bank of Liechtenstein. Some of the biggest diamond traders from
Gujarat reportedly comprised the list.
The Marketplace
- After many months of an upward trend, the polished and
rough markets saw a price correction. - Continued uncertainty about prices is making the market
cautious. - Overall demand is unexpectedly low.
- The sudden weakening of the rupee negatively impacted
sales of size goods in the local market. - Many large firms started moving into the new diamond hub
in Bandra-Kurla Complex.
