21 Aug 2019
DiamondWorld Directory
Home |
Archival
Home
Uncertainty Looms Large over Year-end Diamond Prospects
Pre-Christmas Offtake Delayed by Adverse Factors Gold Jewellery Records 32.55% Upswing...
By: Administrator
|
Aug 23 2006 12:00AM
|
Reference: 2123  

DecreaseIncrease

Pre-Christmas Offtake Delayed by Adverse Factors Gold Jewellery Records 32.55% Upswing

Main Trends :

  • Early US Signals Discouraging
  • Adverse Factors
  • Divergent Price Movements
  • Retailers’ Reluctance
  • Subdued Buying Expected
  • Manufacturing Affected
  • Rough at Discount
  • Financial Assistance to Explosion Victims
  • Outflow Down
  • Gold Jewellery Upswing
  • Bullion Volatile.

The Indian diamond trade has been mostly subdued in the first half of 2006 and even in mid-July most exporters were concerned about pre-Christmas business prospects particularly with the USA, which accounts for nearly half of the annual global consumption of diamond jewellery. Such sales on a substantial scale take place there during the Christmas season.

Early US Signals Discouraging :
Early signals from the US market are far from encouraging. Representatives of some diamond firms in USA who were herein early July, which is the vacation period there, point out that the US diamond trade is nursing the highest ever accumulation of inventories; sales have slowed down and prices of polished goods have declined, denting the usual optimism for the ensuing Holiday season.

Adverse Factors :
They attribute the depressed conditions in the US market, on the one hand to the persistent slackness of the US economy, and on the other hand to high prices of gasoline which brings down the savings of average consumers. And also there are other sectors which are trying more effectively to lure them to buy other articles like Plazma TV, I-Pols, Digital Cameras, etc.

Divergent Price Movements :
Earlier this year, suppliers of rough raised their prices. Normally, prices of polished goods as well as diamond jewellery should have moved up in tandem. This has, however, not happened till now. Actually, the prices of polished diamonds on an average have come down in US market by 6-7 per cent, and in certain cases, even by 10 per cent. Even so, sales are not moving up as if consumers were somehow losing their liking for diamonds.

Retailers’ Reluctance :
Normally, retailers in the USA used to start making fresh purchases from July onwards to fill up their showcases for the ensuing Holiday season. This year, however, many retailers seem as yet disinclined to make any fresh purchases, possibly because of their present high inventories and lack of optimism about the upcoming Christmas season. Overseas suppliers who are ready to send goods on long term credit, cannot expect payments before 9-12 months. Some of the US firms have become financially weak because of lack of sales and shrinking margins. This situation continues to cause concern to every one.

Subdued Buying Expected :
Purchases of diamond jewellery during the Christmas season in the US market are made primarily for two purposes (i) Engagements and marriages and (ii) for offering gifts to relatives and friends. Purchases for the purpose of gifts are expected to slowdown substantially in the coming season. Though number of engagements and marriages may not change much but the buyers are expected to remain budget-conscious in view of the present state of the US economy and rising oil prices. Only some miracle can change this situation. One cannot, however, take for granted its occurrence.

Manufacturing Affected :
After a prolonged vacation, manufacturing units have mostly commenced production, but understandably on a reduced scale. This is because most of them are already nursing substantial unsold stocks and overseas enquiries remain few and far between. That apart money stringency is also affecting production. Payments from abroad are delayed abnormally. Besides, a number of firms which had diverted their attention to the property and stock markets find their funds locked up there, in view of setback in those markets. Banks have turned cautious. The cost of funds from private sources comes to about 15 per cent per annum or even more. In view of these factors, the diamond manufacturing industry seems to be operating at just around 70 per cent of its capacity. If the situation were normal, it would have been in full swing in July, to be ready with polished goods to meet the overseas pre-Christmas demand. Very few overseas buyers are seen in the Mumbai market at present. Most dealers expect overseas enquiries from late August, after Belgian holidays.

Rough at Discount :
In view of reduced manufacturing activity, there is lack of enough demand for diamond rough in the open market. Consequently rough diamonds are going at discounts of 7-8 per cent below their producer prices. Reports about export performance of Israel and Belgium are also discouraging. Some exporters are saying that they have not experienced such a difficult situation in the past several years. Unsold stocks with the trade are far higher than normal. Reports about weakness of some major firms in the US also continue to cause concern to everyone.

Financial Assistance to Explosion Victims :
As a result of the serial explosions in Mumbai’s suburban trains on July 11, 2006 at least 10 persons connected with diamond business, mostly small traders and brokers lost their lives and several others were injured.

At a condolence meeting held under the auspices of several trade associations of the diamond industry and trade it was announced that each bereaved family will be given ex-gratia assistance of Rs. One lakh, while every person suffering injuries will be given assistance of Rs. 50,000. Additional assistance may also be given in special cases. It was also announced that the diamond trade was considering measures to strengthen security in its market located in the Opera House area Mumbai.

Outflow Down :
Meanwhile, preliminary estimates indicate that exports of cut and polished diamonds from the country in the first quarter of 2006-07 have gone down 11.92 per cent at US$ 2398.13 million, from US$ 2722.65 million in the same period of the earlier year. These estimates might improve to some extent when figures of despatches from SEEPZ and Delhi come under reckoning.

Gold Jewellery Upswing :
Shipments of gold jewellery during this period have however been up 32.55 per cent at US$ 895.86 million, against US$ 675.85 million in the same period a year ago.

Bullion Volatile :
Bullion has turned buoyant and volatile in view of the conflict in the Middle-East and rising oil prices. On July 14, 2006, the yellow metal in the overseas market was placed at US$ 661.8 per oz., while silver was quoted at US$ 11.58 per oz. The domestic market followed the overseas trend, with standard gold rising to Rs. 9,940 per 10 grams and silver to Rs. 18,300 per kg.
- Ratnakar

Have Your Say
* Your view
* Name:
* Email:
* Town/city:
* Country/State:
Advertisement
M. Suresh234x60
Search News by City
Advertisement
Kosher 23460
Advertisement
HouseAd_Trade Fair
Recent Issue
2019
AVAILABLE NOW...!
Advertisement
Kosher 23460
News in Pictures
Videos
Stunning Jewellery from Cannes 2019
Pictures: 24
Sparkly Jewels at Oscars 2019
Pictures: 19
Golden Globes 2018
Pictures: 15
Spotted: Who Wore What (December 2018)
Pictures: 4
India Diamond Week
Pictures: 8
Spotted: Who Wore What (October 2018)
Pictures: 7
Spotted: Who Wore What (September 2018)
Pictures: 6
70th Emmy Awards
Pictures: 11
35th India International Jewellery Show 2018
Pictures: 46
Spotted: Who Wore What (August 2018)
Pictures: 4
JJS - IJ Jewellers Choice Design Awards 2015 powered by GIA
Views: 16580
GJEPC Chairman Interview
Views: 15366
IJ Jewellers Choice Design Awards 2012 - Part 1
Views: 22224
Promo for IJ Awards 2012 at NDTV Profit
Views: 35069
IJ Jewellers Choice Design Awards 2012- Part 2
Views: 38470
Couture India 2016 - A Business Boutique Show by IJ Magazine
Views: 12759
Savjibhai Dholakiya, Surat Businessman (Diamond Merchant) speaks in Vibrant 2015
Views: 36506
IJ Jewellers Choice Design Awards 2013 - NDTV Video
Views: 34471
Advertisement
Finestar Diamonds
Advertisement
Mohra India