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11 april 2014

The Month of March 2014 brought much more cheer to the Indian diamond industry than the preceding months, when it was besieged with one challenge after another. The polished market, during the month,  was active with demand from overseas as well as the domestic jewellery sector showing sudden increase, so much so that shortage of goods were reported for almost all colour/size of stones. The manufacturing activities in the cutting and polishing centres were in full swing, though the perennial rough shortage woes continued to be the hurdle.

But, with De Beers keeping its prices basically stable at the February Sight closing with an estimated value of $650 million, the Indian diamantaires heaved a sigh of relief. While sightholders reported healthy premiums on the boxes, trading in the secondary market was active throughout the month of March. Mood was positive in the Indian diamond market, predicting good days ahead. Manufacturers were upbeat with profits look well above previous months. It is reported that rough trading on the secondary market was stronger before the Sight with expectations for a price increase. ALROSA’s prices, too, were quite stable, with the mining major adjusting prices on different categories (with the average price rising 2.5 percent) at its February trading session.

The Indian diamond manufacturers are looking towards diamond producers worldwide to solve the rough diamond shortage problems. Therefore, the invitation for the rough auction in Zimbabwe recently was enthusiastically welcomed by the Indian industry. Zimbabwe had invited diamantaires to participate in the rough diamond auctions worth 12 million carats to be carried out throughout the year 2014, which should take care of at least a percentage of rough requirements for India. Surat is the biggest processor of the Zimbabwe rough diamonds, which come in small sizes and about 55 per cent cheaper than rough diamonds from other producing countries. The small and medium sized units, especially, will benefit from the Zimbabwean rough diamonds to feed their units.

Demand for polished goods from consuming markets world over is picking up, though Europe is lower than expected. Going by the number of overseas buyers in the Mumbai diamond market, one can assess the economies of some countries picking up and showing a turnaround. US market remains the main market for Indian polished goods as well as diamond-studded jewellery. The diamond jewellery exporters, too, are closing good deals as in large orders from overseas buyers. The recent very successful fairs - Hong Kong as well as Dubai - have resulted in a flurry of activity in the Indian manufacturing sectors, both in loose diamonds as well as jewellery sector. The demand for Indian polished goods as well as diamond/gold jewellery has increased manifold from the Gulf countries. Following the success of the Global Gems and Jewellery Fair (GGJF) in Dubai, the Gems and Jewellery Export Promotion Council (GJEPC) has even decided to make it an annual event.

Confidence has returned to the Indian diamond sector now as the industry’s export figures for polished goods for Feb.’14 shows an increase by 16.11 % as compared to the previous month;  as per the provisional figures announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India. Also, for the period of Apr ‘13 to Feb ’14, polished exports totaled a high of US$ 18,146.89 million as against US$ 15,081.23 million for the period Apl.’12 to Feb. ’13, registering a 20.47 percent rise.

On the flip side however, polished diamond imports recorded US$ 5,838 million for Apr ‘13 – Feb ’14 as against US$ 4,431.27 million for the same period last year, an increase of 31.76 percent. For the month of Feb. ’14, too, polished imports recorded a high of US$ 564.49 million from US$ 471.21 million in Feb.’13, registering an increase of 19.80 percent.

This is a worrying aspect for the cutting and polishing sector in India. The Indian government’s attempts to control excessive import of polished diamonds seem to be ineffective. According to GJEPC’s figures, the increase in import of polished diamonds is mainly due to the SEZ zones from all over India; as well as the Mumbai DTA importers.

Another reason to celebrate for the Indian industry was the announcement of 5 Sightholders to be included by De Beers. Four of the five new ‘sightholders’ added for 2014-15 by De Beers to its existing list were Indian companies ---Star Rays, Vallabhbhai Danjibhai & Co, J.B & Brothers and D. Navinchandra Gems. Most of the leading players in India, including the four mentioned, purchase rough diamond through online auctions conducted by Diamdel, Rio Tinto and Alrosa, the Russian rough diamond mining company.

The Indian Domestic jewellery sector is on fast track as of now. Demand for loose polished stones, especially for high-end stones, has increased from the domestic jewellery sector, an indication of demand for diamond jewellery increasing in all towns and cities of India. Gold jewellery, however, remains the highest demand-wise, beating all other categories due to the psyche of the gold-obsessed Indian population. Local companies, irrespective of gold shortage, continue launching Jewellery Collections for all festivals and occasions. And the end consumer has not stopped buying gold jewellery, despite the price rise...that’s India for you!

Reports of gold smuggling make everyday news, and the Indian Government is taking all steps to tighten checks to curb gold smuggling, but of no avail.

The Government of India has now started to make physical checks of gold stocks held by wholesalers to ensure inventories match the amount imported by banks and state-run traders. But faced with intense pressure to relax gold import curbs, the government said it will review the decision after getting final figures of the current account deficit (CAD).

However, to the cool nerves of the gold jewellery sector, the Reserve Bank of India has allowed HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank and YES Bank to import gold. This move by RBI to allow more banks to import gold may raise shipments to 40 tonnes a month from not more than 20 tonnes in February. This should ease the gold shortage situation to a certain level, if not totally.

The demand/supply situation during the month of March 2014 was as follows:

POLISHED:  Rounds

0.005-0.15 cts, F-J / SI+, selling very well;

1/5, H-J / VS, very good demand

1/4-3/8, selling well 1/4-3/4, D-J / SI+, moving fast, less goods

1/2-3/4, white / pique, moving well, shortage of goods in the market

0.80-0.90 cts, selling well; F-J / VVS goods / less goods

1.00-3.00 cts, D-K / SI to pique, selling well, very good demand, very less goods available

1.00-3.00 cts, H-J / SI1+ high demand for good makes

4.00+ cts, H-M / VS+ selling ok, but less goods

Fancy Cuts

Emeralds and Stabbes (wide baguettes), 0.25-1.00 cts, good demand D-J / VS+, selling well.

Marquises 0.25-5.00 cts, F-J / VS+, good demand, moving well

Princesses, Pears and Emeralds, 2.00-5.00 cts, good demand for H-K / VS, selling well, good demand

ROUGH:

Makeables:  good demand; shortage of goods.

1-5 point:  fair demand: makeables; very good demand for OW TTLB & TTLC. Shortage of goods

6-20 point: v.good demand: crystals/makeables.  Shortage reported

Fancies:

21-50 point: very good demand, less goods

0.51-1.00 carat: good demand: makeables; crystals.

1.01-2.00 carat: very good demand:  rounds; crystals, all fancy shapes. Shortage of goods

2.01-3.00 carat: fair demand

5.00 carat+:  Fair demand: $1,000+ makeables, crystals & all fancy shapes

Mixed lot: v. good demand

Aruna Gaitonde, Rough&Polished, India