The closing bells of the first year of the new decade did not strike quite the right notes for the diamond industry — and that was especially true in India. Just when everything was looking upbeat on getting much-needed new rough supplies, the controversy surrounding the Marange diamonds managed to spoil the show, returning the market to rough shortages once again.
Wish List 2011
“I wish to see the Zimbabwe issue solved. Before we see the industry get bogged down by shortages of rough, I want to see the Kimberley Process (KP) resolve the Marange diamonds issue,” said Sanjay Kothari, vice-chairman, Gem and Jewellery Export Promotion Council (GJEPC).
India’s concern with Zimbabwe’s stalled supply lines is undoubtedly heightened by the fact that there are rumors that Russian manufacturers want to restrict the amount of rough the country exports to Surat. In December 2010, RDR reported that the manufacturers were concerned about India’s “aggressive interest” in Russia’s stockpiled rough — rough they would like for themselves. In a market where rough is in short supply, Zimbabwe and Russia are the most promising new sources of rough, not only for India, but for the global diamond industry as well.
Kothari is not alone in his frustration with the Marange controversy, in which KP certification for diamonds bound for export is being held up pending the resolution of human rights abuse allegations. In fact, the entire industry would like to see the KP issue resolved. At the same time, the Indian diamond industry is emphasizing the importance of being vigilant so as not to allow uncertified diamonds to enter the country.
Marange is not the only item on Kothari’s wish list for the new year. Overall, he said he wants a better 2011. “2008 and 2009 were not very good for the industry,” he admitted. “2010 was relatively good, but I hope 2011 is much better.”
Kalpesh Vaghani, partner in Kapu Gems, has his own priorities for 2011, including “optimum inventory management, perfect finance management and not getting involved in the diversion of business funds into other avenues.” To that, he adds that he intends “to have a value-based business rather than a volume-based business and, most important, to have a transparent and honest business model and not get involved in speculative activities that could mar the credibility of the industry.”
The Show Scene
In response to the popularity of the August India International Jewellery Show (IIJS) — 300 companies are reportedly on the waiting list to exhibit at the show — IIJS moved its Signature show, originally scheduled for Goa, to Mumbai, where it was scheduled for January 7 to 10, 2011. “We are witnessing a lot of interest from industry players who wish to participate in our shows,” explained Kothari. “In Goa, accommodating a large crowd is not feasible so we scheduled IIJS Signature in Mumbai this year.”
The International Solitaire and Designer Jewellery Show (ISDJ), which was held in Mumbai in December 2010, is a platform to promote communication and interaction among designers, retailers and manufacturers within the diamond industry. It also provides a venue for business to be conducted between retailers and manufacturers. According to the press statement issued by the Federation of Indian Chambers of Commerce and Industry (FICCI), the event’s sponsor, the three-day show gathered together eight jewelry manufacturers, 14 national and international brands and 60 retailers from 45 cities across India. Apart from providing a networking opportunity, the agenda included panel discussions on trends in the industry.
A curtain-raiser for Sparkle 2011, which was scheduled to open in Surat January 6, was organized in advance of the show in December by the Southern Gujarat Chamber of Commerce and Industry (SGCCI), the Gujarat state government, the Surat Municipal Corporation (SMC) and the Surat diamond industry. The four-day show is expected to attract 225 international buyers and participants from the U.S., Hong Kong, China and Europe.
GIA Scholarships
At the inauguration of the Indian Institute of Gems and Jewellery Jaipur (IIGJJ) on December 13, 2010, Rajiv Jain, chairman of GJEPC, said that the Gemological Institute of America (GIA) has agreed to offer scholarships to students of IIGJJ who want to pursue GIA courses on-site at the Jaipur institute. The scholarships would subsidize up to 30 percent of the course fee.
Market Dynamics
The imbalance in the demand and supply of polish versus rough continues to be a cause for concern. According to Vaghani, “There are speculation-based high prices in the rough market and the polished market is also witnessing steep prices. Because of the slow movement of the polished market, we do not feel these rough prices will be easily absorbed. I feel that the increase in prices is due to the lack of proper organized channels for the supply of rough diamonds, which has resulted in these unwanted markups for the rough goods.”
The Marketplace
• Trading activity is stable and polished prices have been on the rise across the board.
• Small goods under 1 carat are trading well and inexpensive piqué items remain strong.
• Shortages are apparent in most categories and new production is limited due to rough shortages.
• Discounts on polished prices are narrowing for most categories, especially collection and premium goods.
• Markets are gearing up for Chinese New Year sales, although the focus remains on Far East markets throughout the year.
Article from the Rapaport Magazine - January 2011. To subscribe click here.