Synthetic Disclosure

RAPAPORT… Synthetic diamonds seem to be picking up momentum as an alternative to natural diamonds. Anil Shah from Venus Jewels said that “Synthetic diamonds will definitely have an impact on the diamond industry. Heavy industrialization has converted the overall mindset of people from natural to synthetic. Natural diamonds have always been associated with royalty, status and heritage. This association — and the lower status of synthetics in comparison to natural diamonds — should be emphasized with consumers. If the synthetic diamond manufacturer is capable of delivering the same brilliance, fire and luster as natural diamonds, consumer acceptability levels will be high and there will be a very faint chance of differentiating the product at the consumer level.”

Shah suggested that the diamond industry should “request that the governments of all countries enact a globally stringent law that every diamond should be disclosed as natural or synthetic throughout the diamond pipeline until it finally reaches the end consumer. A penalty should be charged any time that fact is not disclosed. The industry has to think very seriously about its future strategy to fight against synthetics.”

In discussing the demand for synthetics, Paras Mehta, vice president of sales for Dimexon Diamonds Limited, said, “Synthetics are becoming more fashionable because diamond prices have gone up over the past two years, along with gold prices. That is the reason why retailers across the board are pushing more synthetics and semiprecious stones.”

Supply of Rough

Mehta predicted that “Rough supply is going to be an issue this year as the Diamond Trading Company (DTC) is going to be more selective in allocating goods, and outside goods, when they come in, will be more expensive than the DTC goods. The margins between rough and polished are improving, but I do not know how long they will remain.”

Shah agreed. “The overall supply system is not healthy due to the nonexistence of direct rough supply to manufacturers,” he said. “Normally, the economy is dependent on supply and demand [being in balance], but when there is no direct link between the actual manufacturer and the mining companies, the market becomes volatile. For most natural products, the mining company and the manufacturer have a strong relationship, which is beneficial to them as well as to consumers. But, unfortunately, in the diamond trade, this direct supply system is absent.”

Developments and Innovations

DTC India recently launched the Forevermark as a special symbol and unique identification number to vouch for a diamond’s authenticity and master craftsmanship. The introduction follows earlier launches of Forevermark in Hong Kong, China and Japan. A Forevermark diamond costs approximately 5 to 12 percent more than an unmarked diamond of the same size and only diamonds of 0.30 carats and larger are eligible for the mark.

Jonathan Oppenheimer, DeBeers director, revealed during an interview at the World Economic Forum in Davos, Switzerland, that De Beers plans to open a store in India in recognition of the potential of the Indian market. Other plans De Beers has for India include product placement in Bollywood movies and expansion of the company’s Nakshatra brand.

Adding innovation to its offerings is Tanishq, which has the Celeste brand of solitaires. A new concept by the company will allow customers to personalize a diamond by laser-inscribing a message suitable for any occasion, including an engagement, marriage, a promotion or just a great day. In addition, Tanishq will also inscribe a unique identification number to ensure the safety and security of the stone.

In another bid to strengthen its presence in foreign markets, Gitanjali Gems, a leading diamond exporter, has made another overseas acquisition. In February, it bought a majority stake in U.S.-based Tri-Star Worldwide, a licensee of Canadamark. The deal enables Gitanjali to be a manufacturer and global distributor of Canadia brand diamond jewelry. In December 2006, the company acquired U.S.-based Samuels Jewelers, Inc, which operates 97 stores in 19 states.

Business with U.S Retailers

“U.S retailers are buying very specific goods,” said Mehta, citing strong demand for goods I1 and better and little demand for I2 and below.

Commenting on changing trends, Shah said, “People are going for better cut, fire, polish and symmetry. We have observed that large-size goods are doing extremely well and the demand for VS and above, D to F colors is on a constant rise.”

The Marketplace

• Trading activity has been good for domestic sales, but the export market is relatively weak, with movement only in certain categories of goods.
• Prices are stable overall, with shortages seen for better-quality goods in sizes across the board.
• -2 goods and melees are moving very well.
• 0.80 to 0.99 carats are still hot, with shortages for VS+, I+ goods.
• Caraters are still going strong, with shortages for premium and high-quality goods.
• Demand for 2 carats is showing slight improvement, but plenty of goods are available, especially in SI and lower quality.
• 3 carats are steady and discounts are strong with more goods in the market.
• 4 carats are very hard to find and demand is steady.
• Shortages exist for princesses, pears and marquises in 1.50 carats+ in VS+, I+.
• Demand is weak for emeralds and Asschers and goods under 2 carats are readily available in Indian markets.
• Large rounds and fancies above
5 carats are in good demand and supply is extremely limited so asking prices are very high.