India's Diamond Trade Slow Out of the Gate in 2019

21/02/2019 11:20

Expectations of a sluggish start to the year for the Indian diamond trade were confirmed by the January statistics from the Gem & Jewellery Export Promotion Council (GJEPC), as exports of cut and polished diamonds from India dropped by 16% year-on-year, while rough imports fell by 40%. India exported $1.75 billion of polished diamonds January compared to $2.10 billion a year ago despite a 4% increase in the average price per carat ($799) as waning demand led to a 20% decline in the volume of goods exported. Polished diamond exports from April 2018 - Jan 2019 (FY 2018) were up 1.8% to $19.6 billion, while imports of polished diamonds fell by 40% to $1.1 billion.

Following the January reports of soft demand for 'Indian goods' (smaller, lower quality) from the major rough producers, Alrosa and De Beers, and a dramatic slowdown in rough trading on the Antwerp market, rough diamond imports to India fell to $858 million in January from $1.44 billion in January 2018 (-40%) and $1.74 billion in December 2018 (-51%). In volume terms, rough imports in January fell 37% to 8.4 million carats compared to the first month of the year in 2018 (13.3m carats), and were down by 56% compared to last month (19.3m carats). During the fiscal year to date (April 18-Jan 19), imports of rough diamonds to India have declined by 17% to $12.9 billion from $15.5 billion a year earlier. In volume terms, imports have fallen by 13% from 154.5 million carats for the first ten months last year to 135 million carats in the same period in the current fiscal year.

The fact that these downturns happened at the start of the year, which is typically the time to restock after the holiday season, is cause for concern. Reports from around the industry point to high inventory levels of polished diamonds and depressed demand for smaller goods, which explains the soft demand for small rough diamonds. Manufacturers might be buying goods just to keep their purchasing contracts intact and their factories running, and uncertainty remains high. The hype around laboratory-grown diamonds is also contributing to the feeling of malaise, as speculation about their potential impact on the retail market is slowly turning into a real impact, though nobody knows just yet what their full impact will be. 

Those looking for a positive sign from India should note that exports of gold jewelry (studded and plain) during the month of January increased 32.4% to $867 million from $655 million a year earlier.