MUMBAI, SEPT 19: It's millennium frenzy that has gripped the global $11 billion plus diamond industry which is witnessing a high-pitched aggressive marketing by the diamond majors like De Beers and Argyle among others. Till at least first quarter of 1999, the industry including domestic diamond processors and exporters were worried about excess supplies and squeezing margins.Not any more. Of late, De Beers' Central Selling Organisation (CSO) is said to have managed to wrest the control of supplies of roughs in the global diamond market, thereby regaining its lost marketshare to over 70 per cent from around 60-62 per cent in 1996-97.
The strengthened CSO, with aggressive diamond marketing campaigns globally, is commanding premiums for better quality of roughs, which coincides with the overall supply shortage of lower-end roughs. But domestic diamond processors and exporters are not complaining but willing to pay high price for roughs to cash in on the millennium rage.
This surge in demand for roughs isnow expected to percolate down to the prices of polished diamonds, which industry sources feel, are likely to go up by around 7-10 per cent by end-September and early October to meet the peak diamond jewellery buying season before the start of the next millennium in January next.
The shortage of low-end diamond roughs has pushed the premiums ranging from around 10 to 25 per cent (depending upon the quality of roughs), up from less then five per cent in March this year and nil last December.
Interestingly, the surge in business prospects in the global diamond market has even lured number of new private and public sector banks to this sector. Thus, even when the bankers find it difficult to get worthy borrowers in other sectors, number of bankers seem to be falling over each other to extend loans to the players in the diamond industry -- exporters and processors, et all.
Little wonder therefore, players in the domestic diamond processing and exporting industry are more than just happy. And they are allscurrying to get the piece of the cake sparkling with diamonds by buying the roughs even at higher levels.
"There has been an overall shortage of diamonds--more so in the low end category--which coupled with rising demand for the millennium sales has resulted in the upbeat mood in the industry," said an industry source. "This situation is likely to see the sales of polished diamonds to scale yet another peak during the next half to March 2000."
India's exports of cut and polished diamonds had crossed $6 billion during 1998-99 ($6,206 million, or Rs 26,016 crore), up from $5,574.22million (Rs 20,574 crore) in 1997-98. The pent up demand for diamonds before the next millennium is likely to see India's diamond exports reach closer to $6 billion--a whooping 20 per cent-plus growth.
According to figures furnished by The Gem & Jewellery Export Promotion Council (GJEPC), export of cut and polished diamonds during the four months to July 1999 was placed at $1,626.95 million (88.63 lakh carats), up from 1,426.03million (79.18 lakh carats) in the same period last year.
On the other hand, the import of roughs during the April-July 1999 is placed at $1,618.52 million (608.24 lakh carats), up from $1,312.95 million (538.17 lakh carats) in the same period last year.
There are at least five reasons for the upbeat mood and higher prices for roughs prices in the diamond industry.
First, the decrease in the sales of roughs outside the Central Selling Organisation (CS)) of De Beers, primarily by Russia and South African countries like Angola and Zaire among others where Angola is entangled in civil war; Second, this situation has increased the share of the CSO syndicate in the global diamonds sale to over 70 per cent from around 60-65 per cent in 1996-97; Third, the strengthened CSO has began to control the supplies of diamonds, more so of the smaller and lower end varieties thereby pushing once again the roughs of better quality at higher prices; Fourth, the overall production by ArgyleDiamonds, the main breakway partner from the CSO syndicate in 1996, has declined by around six million carats to 32 million carats; Fifth, fresh supplies of diamonds from the Canada's Ekita mines are said to be of higher value, more suitable for diamond processing industry of Israel than that of India which is used to process lower end products only.In order to penetrate the traditional gold loving market of India, De Beers, the global diamond major, has from September 1 began its aggressive marketing campaign to lure the fairer sex to the sparkle of the stone during the festivals. This marketing campaign will continue till January 2000.
De Beers' aggressive diamond marketing strategy is sure to dent the India's gold and silver loving market, not just in the metros, but even in the semi-metros, diamond traders feel.
In order to attract the global upmarket clientele, De Beers even unveiled in London last Wednesday, for the first time, its `millennium range of diamonds', including the 208 carat`Millennium Star'.
"But it remains to be seen", says a chairman of a leading diamond company, "to what extent De Beers' aggressiveness results in sales of diamonds in the global market, majority of which is currently undergoing through recessionary trends".
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
Printer-friendly page