De Beers cuts rough diamond prices by 5%

Suresh P Iyengar Mumbai | Updated on November 06, 2019

De Beers has cut rough diamond prices by five per cent in its November auction.

De Beers, the largest supplier of diamond, has cut prices for the first time in several years as the demand in its auction for rough diamond has shrunk.

The move will salvage the sinking Indian cut and polish industry which is struggling under credit crunch as most of the banks have stopped lending to the industry after a series of defaults by large players. The cut in prices will improve the profit margin for traders and for cut and polish industry.

According to De Beers data, retail demand for diamond jewellery has increased by 2.4 per cent last year whereas in the US market, the increase was 4.5 per cent. While the retail market has seen strong demand, the wholesale demand from polishers and traders were lowest in three years due to oversupply and financing difficulties.Interestingly, the benefits of cut in rough diamond prices may not be passed onto retail consumers. Reflecting the trend Diamond 1Ct futures contract on Indian Commodity Exchange (ICEX) settled up 0.27 per cent at ₹3,556 per carat.

In fact, diamond for December delivery on ICEX has been consolidating in the broad range of ₹3,400-3,650 this year and the trend is expected to continue unless a structural change occurs on the physical side of the market.

Turnover of diamond trading on ICEX, jumped three times to ₹2,436 crore in October from ₹788 crore logged in September.

Ajay Kumar, Director, Kedia Advisory said, “Hopes of peace in the trade war between the US and China has brightened as both they work to narrow their differences. This will boost global economy and drive demand for diamonds.”

However, sentiments currently in spot diamond markets are low and has not improved after Diwali. The sale of jewellery in the September quarter was down 16 per cent at 461 tonnes.

Weak consumer sentiment due to continued geopolitical and economic uncertainty, coupled with substantially higher gold prices, dented jewellery purchases in all major markets.

Published on November 06, 2019

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