India's Small Diamond Polishing Units Lowering Production by 50%

Manufacturing
12/06/2019 08:55

A combination of factors has led to a nearly 50% decline in production by small diamond manfacturing units in India, not the least of which is a significant decline in the price of small diamonds (0.30 carats), writes the Times of India (TOI). According to the most recent RapNet Diamond Index, the price index for diamonds weighing 0.30 carats has fallen by 16% over the past year, and about 25% since January. The vast majority of these stones are manufactured in Surat and has caused already-low margins for manufacturers to plummet. 

The TOI estimates there are nearly 4,000 diamond polishing units in Surat, some 500 of which have not opened since summer vacation ended last week. "Most of the diamond units," the daily writes, "especially the small units operating less than 20 wheels, have cut production by shutting down 80% of their machines." Babu Gujarti, president of Surat Diamond Association, estimates the number a bit lower. “The diamond units in Surat are operating at half the capacity as they are trying to reduce inflated inventory. Manufacturers are rejecting high-priced rough that has made the production of polished gems unprofitable. Those operating 15 wheels have shut down half of them." He did not blame the situation all on prices, however, citing the trade disagreements between the U.S. and China as having an impact on consumer demand. Others have cited the acceptance of synthetic diamonds as taking a toll on demand for small stones, while analyst Aniruddha Lidbide told TOI, "Some US retailers are shying away from natural melee diamonds because of the threat of undisclosed synthetics."