After a lull of eight months, the domestic diamond trade is witnessing early signs of recovery as US consumers have started buying solitaires of more than one carat, helping revive the market which accounts for more than half of India’s diamond exports.
“Natural diamond jewellery sales were up 5.1% by units and 4.7% by revenue in November, when holiday purchases picked up in the US. Loose diamond unit sales rose 16% in November on a year-on-year basis,” said Vipul Shah, chairman of the Gem & Jewellery Export Promotion Council (GJEPC).
Demand for diamonds in the US had almost halved in the past few months as the world’s largest economy grappled with recessionary pressure.
India’s exports of cut and polished diamonds in the April-November period stood at $11,063.62 million, down 27.95% year-on-year.
“But since Christmas and New Year are big events in the US, the purchase of diamonds has gone up. What is most assuring for the Indian diamond trade is that the US buyers are spending on solitaires,” said Kirit Bhansali, vice chairman, GJEPC.
Traders said a notable trend in loose natural diamond sales was the increase in average diamond size bought by consumers. In November it expanded to 1.66 carats, an encouraging development for retailers and the diamond industry since the margins are higher on diamonds weighing more than 1.50 carats.
The size ranges 1.00-1.04, 1.50-1.59 and 2.00-2.24 carats saw the highest demand, representing 36% of diamonds sold in November.
Bhansali said the smaller stones also witnessed good demand. “Prices of smaller stones went up 10%. At this juncture, we can say that there we are seeing early signs of recovery in the US market,” he said.
However, the diamond trade continued to be concerned about the Chinese market. “The China market is yet to open up and very few goods are going there. We are hoping that after the Chinese New Year, there will be some movement in the Chinese market,” said Dinesh Lakhani, director (global business), Kiran Gems, the largest diamond manufacturer in the country.
The GJEPC vice-chairman said India’s diamond exporters are looking at newer markets in the absence of China. “Vietnam is looking promising and exports to the country have begun. We are also looking at South America for exports of diamonds,” said Bhansali.