Tuesday, June 25, 2024

India calls for 2-month moratorium on rough diamond imports

Mumbai, India-Diamond industry leaders in India are appealing to the country’s miners and manufacturers to stop importing rough diamonds for at least two months.

In a letter, they “suggested” that manufacturers halt imports of rough diamonds from October 15 to December 15 in response to a decline in diamond jewellery demand in the world’s two largest markets, the United States and China.

The letter also notes that Indian diamond leaders have already contacted all major diamond mining companies and asked them to support the industry with a “prudent and responsible approach in their offerings to their respective customer base”.

It states: “We have observed that mining companies regularly sell the rough diamonds that are mined, regardless of the state of demand in the midstream. They believe that midstream is a mature segment of the pipeline and will only buy rough diamonds when there is real demand.

“In other words, they rely on the midstream to gauge the demand for rough diamonds and are happy to respond with a corresponding level of supply. This puts the onus on the midstream to communicate the real level of demand by communicating the need for supply of rough diamonds to all mining companies.”Alrosa, which remains under US sanctions, agreed last week to cancel its September and October sales in response to a request from India’s Gem & Jewellery Export Promotion Council (GJEPC).

De Beers said it would continue to keep its eyes on the prize, focusing on “additional supply flexibility” for sightholders if needed.

The company said it would “continue to take a responsible approach to rough diamond sales, meeting demand and supporting both the short and long term health of the industry, as we have done in the past when faced with challenging industry conditions”.

Together, Alrosa and De Beers account for approximately 53 per cent of global production by volume and 59 per cent by value.The call for a temporary halt to rough diamond imports comes as a fall in demand for diamond jewellery has left Indian companies with more polished natural diamonds in a market where prices are falling.

It is the third time that industry leaders in India have made such a plea. The first was in 2008, during the global financial crisis, and the second in 2020, during the COVID-19 pandemic.

As Stephen Rego reported for National Jeweler’s September 2023 India Diamond Report, the country’s polished diamond production is well below last year’s levels, signalling an end to the halcyon days the industry experienced in the immediate aftermath of COVID.

According to figures released by the GJEPC, in the first five months of India’s fiscal year (April to August 2023), polished diamond exports were down 30 per cent in value and 28 per cent in volume compared to the same period last year.

Ajesh Mehta of D. Navinchandra Exports, who also heads the GJEPC’s Diamond Panel Committee, told Rego that while manufacturers had anticipated a decline in US demand, the global slowdown has been deeper and wider than expected, due in large part to stagnant demand in China.

In the letter, the industry leaders cited examples of the various initiatives underway to stimulate demand for natural diamonds, including the GJEPC gala at the recent Hong Kong show, the new dedicated diamond section at the India International Jewellery Show and the efforts of the Natural Diamond Council, which has just launched its latest campaign.

De Beers is also looking to stimulate demand for natural diamonds this festive season by reviving and refreshing its “Seize the Day” campaign from the 1990s.

“We have no doubt and remain confident in our ability to address and improve the long-term demand for this precious and rare natural resource, but at the same time we must carefully manage the short term,” the letter said.

The heads of five major Indian diamond industry organisations signed the letter: GJEPC chairman Vipul Shah, Bharat Diamond Bourse president Anoop Mehta, Mumbai Diamond Merchants Association president Bharat Shah, Surat Diamond Bourse chairman Vallabhbhai Patel and Surat Diamond Association president Jagdish Khunt.

The letter calls for a review of the proposed ban on rough imports on 1 December to assess whether the supply/demand situation has improved.

It also states that Indian diamond manufacturers should continue to operate without interruption despite the ban on rough imports, and that measures should be taken to ensure that the moratorium doesn’t affect the livelihoods of the country’s many diamond factory workers.

“Having taken these steps, we have no doubt that we will emerge from these challenging times stronger than ever, as we all believe in the long-term consumer demand and value of this finite natural gift of love – diamonds.

“Let us act together in the collective interest of the Indian diamond industry so that we can move confidently towards a better season ahead,” the letter concludes.

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