Small diamantaires in Surat losing sheen as De Beers implement huge price hike
Surat (Gujarat) [India], January 19: A large section of diamantaires in Surat producing small and less expensive stones for the jewellery aficionados in the United States, the world’s largest diamond jewellery market, has hit a snag. Reason: De Beers, the world’s largest diamond mining company, has pushed through one of its most aggressive price increases in recent years, as cutters in Surat went on a buying spree as demand soared post-pandemic.
While De Beers raised prices by 8% in its first sale in 2022, the biggest increase came in the smaller and cheaper stones ranging from 15-20%. The price hikes, according to the people familiar with the situation, is due to the buying frenzy of the rough diamonds in India following the improved demand, especially from the jewellery consumers in the U.S and China.
Surat in Gujarat is the world’s biggest manufacturer of smaller and cheaper stones set in the jewellery articles widely preferred by consumers in the U.S.
Industry experts said the diamond industry was the first winner as the global economy rebounded from the first effects of the pandemic. The consumer demand for diamond jewellery has grown strongly last year, while supply remained constrained due to the shortages in the rough diamond supplies from the diamond mining companies.
Post-Christmas, the diamantaires in Surat went on the buying spree to tap on the improved demand from the world markets, especially the U.S. The secondary market, however, responded to the rush with the prices going up by almost 25% in the smaller and cheaper stone categories.
The sightholders or clients of De Beers purchase rough diamonds in lots during the 10 sales cycles throughout the year. While about 60% of the goods are kept for in-house processing, the rest is sold in the secondary market. This is where the small diamantaires purchase rough diamonds to keep their units working.
A small diamantaire, Ramesh Patel told TBT, “Polished diamond demanded has rebounded post-pandemic, but the profit margin is very thin. In these circumstances, we can’t take a hefty price hike of 25% in small diamonds implemented by the big diamond companies. It is a do-or-die situation for us”
Another diamond manufacturer, Ravji Vaghasia said, “The mining companies are responsible for the price hike and impacting the business of small unit owners in Surat. For example, the goods we were buying for Rs 500 per carat are sold for Rs 600 per carat. There is a clear erosion of Rs 100 per carat profit on the diamonds”