Volatile gold, soaring energy take toll on diamond exports

Exports down by over 6% until February end :GJEPC
Volatile gold, soaring energy take toll on diamond exports

Rising energy prices, a dip in demand in the US market and volatility in gold prices have affected exports of cut and polished diamonds from India. The exports were down by over 6% until the end of February (or during the first 11 months of fiscal ’06-07) according to the Gem & Jewellery Export Promotion Council (GJEPC) data.

The total exports, however, including diamond-studded gold jewellery and coloured gem stones grew by over 5%. Diamantaires say the number of enquiries has gone down and that the trend is likely to continue for the next two months.

“Though the net exports are marginally high, the scenario is not rosy because one has to take into account the increase in gold prices, which has pushed the export value up,” says a senior GJEPC.

Sanjay Kothari, president of GJEPC says demand from the US market, which consumes around 50% of the total jewellery, is not encouraging. “We are focusing on markets such as CIS countries and Japan,” he said.

According to Kothari, increasing energy prices, a slowdown in the US economy and volatility in gold prices have affected the performance. “We believe the situation may continue for some time to come. We expect things to improve from 2008 onwards,” he said. Surat, world’s largest centre for cutting and polishing diamonds is already facing the heat. While some have started diversifying into other businesses, others are focusing on value-added products.

“The number of enquiries have dropped significantly. We do not see any change in near future,” says Chandrakant Sanghvi of Sanghvi Exports.

The export of cut and polished diamonds for April-February (07) stood at Rs 43,828.22 crore as compared to Rs 46,663.56 crore for the corresponding period previous year, registering a decline of 6.08%. The total exports of gold jewellery grew to Rs 21,349.94 crore for the period from Rs 15,125.41 crore of the corresponding period last year, marking an increase of 41.15%. However, experts say an increase in gold prices is a major reason.


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