COVID-19 steals rough diamond’s sparkle

By: |
March 7, 2020 4:30 AM

India’s diamond industry cuts and polishes 90 % of the gems sold globally.

diamond, diamond industryVimadalal assures that diamond miners have already adapted to market volatility and polished stocks in the middle segment of the pipeline are much lower than they were a year ago.

The global market for diamonds, which saw a revival and stabilisation in December and January, is witnessing a slump from February due to the COVID-19 outbreak, Alrosa, the world’s largest diamond mining company said.

India’s diamond industry cuts and polishes 90 % of the gems sold globally.

The Russian mining company, which accounts for more than a quarter of global diamond production, has also decided to relocate its March auctions for rough and polished diamonds from Hong Kong to other trading centres.

Jim Vimadalal, director of Alrosa’s Indian Representative Office, said,“We saw that there was stabilisation in rough and polished sales at the end of 2019 and in January 2020. According to the results of holiday sales, major developed markets and retailers reported an increase in demand and sales. But, since February we have started to observe a decrease in demand of rough diamonds, related to a dip in a jewelry demand due to the COVID-19 outbreak.”

Vimadalal pointed out that with billions of people on social media platforms, bad news spread much faster, making markets vulnerable.

Things get harder with India added to the list of countries affected by COVID-19. Liquidity is tight as companies prepare accounts ahead of March 31 financial year-end. Coronavirus affects cash flow, with Chinese clients delaying payments or returning unsold goods. Volatile rupee creates challenges for cross-border trade. There is a significant downward pressure on Indian polished diamonds exports,” he added.

However , Vimadalal assures that diamond miners have already adapted to market volatility and polished stocks in the middle segment of the pipeline are much lower than they were a year ago.

Alrosa reported that there is robust demand for jewellery from end-consumers. “The preliminary data on Christmas sales shows its year-on-year growth in some regions. This proves that diamond jewellery remains a key way of expressing one’s special feelings,” Alrosa sources said.

According to preliminary data, Alrosa’s rough sales to India-related companies in 2019 totaled $1,790 million versus $2,262 million in 2018 ― a decline of 21% y-o-y. “This is a relatively robust result for such a tough market. The company’s global revenue from rough sales in 2019 declined sharper, by 26%,” sources said.

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