Inflated rough diamonds take the sheen out of Surat’s diamond industry.

Surat: After peaking to the double-digit growth post-pandemic, the diamond manufacturing in the world’s largest diamond cutting and polishing center in Surat has slowed down. Reason: a sudden spike of about 20% in the rough diamond prices in the secondary market.

Industry sources said the rough diamond mining companies including Alrosa and De Beers corrected the rough diamond prices upwards in the range of 7-5% during the July sales period. However, the prices of the rough diamonds in the secondary markets in Mumbai and Surat increased by almost 10-15%.

According to the Gems and Jewellery Export Promotion Council (GJEPC), the overall gross exports of cut & polished diamonds rose 247% at Rs 45,741 crore during April-June-2021 compared to Rs 13,636 crore during the same period of previous  year.

Further, the diamond mining companies are not increasing their diamond output and playing it safe for the market to perform. The mining companies have taken proactive measures to ensure that the diamond production remains steady to maintain their inventories.

Sources said there is no shortage of rough diamonds in the market during the second quarter. Interestingly, the rough diamond prices of both Alrosa and De Beers rose 16% and 14% respectively as the diamond market sentiments in India are upbeat over the increased spending by the consumers in the foreign countries.

A De Beers sightholder asking anonymity told TBT, “The diamond market peaked post-Covid, but it has slowed down in the last fortnight due to hefty increase in the rough diamond prices. The profit margins have been squeezed for the diamond cutters, especially the small-time manufacturers. The demand is good, but the price mismatch is hurting the industry”

Rakesh Gandhi, a rough diamond dealer in Mahidharpura diamond market told TBT, “U.S and China has a robust retail recovery post-pandemic. Both these countries are driving the diamond demand from Surat and India. The biggest challenge is the phenomenal price hike in rough diamonds, which is hurting the diamond industry. Small manufacturers are unable to buy rough diamonds at 20% premium when they know they are going to make huge losses”