KOLKATA: The next time you want to buy a diamond-studded jewellery, you may have to shell out more, courtesy rising roughdiamond prices. Rough diamond prices have gone up by 12% in the last two months due to a global shortage, pushing up the prices of polished diamonds as well. The diamond trade indicates that selling prices may go up in the domestic market by 4-5% by the end of next month when demand for diamond jewellery generally goes up.
But even a 4-5% rise in selling prices is not enough to cover the surge in rough diamond prices and the gap between the rough and polished prices is hurting diamond jewellery manufacturers, retailers and wholesalers. Orra CEO Vijay Jain said: "At the retail level, a portion of the hike will be passed on to the consumer. We will have to absorb quite a bit of the hike. However, the only major respite for the time being is that there is a slow growth in diamond jewellery in the domestic market. The market is witnessing a single-digit growth as compared to the double-digit growth a fortnight ago."
Three weeks ago, De Beers conducted its sale sight for May when it sold $600 million worth of rough diamonds at a price which is almost 4% higher than April's. Many Indian diamond traders -- sightholders of Alrosa, De Beers and Rio Tinto -- are selling rough diamonds on a premium of 4% in the secondary market.
"This has been the story in the last three years when prices of rough went up by 18% year on year. There is a supply shortage globally which is pushing up the prices. And the shortage will become severe as demand for diamond in India and China is showing a huge upswing," said Jignesh Mehta, MD, Divine Solitaire.
Exporters too are worried over rising prices of rough diamonds. "Though the export market is showing recovery, we cannot immediately pass the price on to overseas buyers. We have to absorbed it and this has caused a pressure on our margins," said Vipul Mehta, chairman,Gem and Jewellery Export Promotion Council. The country has exported cut and polished diamonds worth 9,965.14 crore in April 2013, which is 44% higher against the same period last year.
Back in Surat, the world's largest diamond cutting and polishing centre, there has been a decline in output as rough prices have gone up.
"Small and medium enterprises have been hit hard due to the rising rough prices," said Dinesh Navadiya, president, Surat Diamond Association. Surat's diamond industry cuts and polishes diamonds worth 80,000 crore per annum.There are around 2,500 small and medium diamantaires in Surat.