Diamonds are always on top when it comes to demand. No matter what. This is because diamonds are eternal. When we think about giving a loved one a piece of jewellery as a memorable gift, the first thought is about diamonds. Also because of the current situation people haven’t been able to spend on vacations or weddings, so that’s why during these times also people feel that it’s a wise decision to invest their savings in buying diamond jewellery which will be an investment for life Viral Kothari, Kosha Fine JewelsDiamond markets showed a mixed graph in April. A good business recovery in the U.S. and China drove optimism, but sentiment weakened due to the spike in Covid-19 cases in India. Suratbased manufacturers reduced capacity as infection rates rose. Grading labs experienced a backlog because of operating restrictions. Lower inventory levels supported polished prices. Prices for 1ct diamonds increased 2.5% during April and was up 4.2% from January 1.

According to Viral Kothari, founder and director, Kosha Jewels, “Diamonds are always on top when it comes to demand. No matter what. This is because diamonds are eternal. When we think about giving a loved one a piece of jewellery as a memorable gift, the first thought is about diamonds. Also because of the current situation people haven’t been able to spend on vacations or weddings, so that’s why during these times also people feel that it’s a wise decision to invest their savings in buying diamond jewellery which will be an investment for life.”

Demand- supply tango continues
Supply and demand dynamics play a great role in price determination. this shape. We are immensely grateful to our erstwhile suppliers who have kept supplying diamonds even during the pandemic and this has enabled us to fulfill orders in time. So we have never had to face difficulty,” explains Viral Kothari. In case the supply of a particular variety is short, Viral Kothari usually waits for the right cut and quality and does not compromise on the quality of his jewellery and he doesn’t mind paying extra and getting the desired goods and right quality to complete orders. Explains Ashish Goyal, Kotawala Fine Jewels, “After a while, diamond mining companies halt the mining process as it is not profitable and hence in some time the prices get corrected, right now, this is the situation. The moment prices drop to a certain level then it becomes unprofitable.”

Due to Covid, globally a lot of mines halted their production and even in India where majority of rough manufacturing takes place the processes were halted. “This stemmed from many reasons such as travel restrictions, miners being forced to work in smaller capacities or local lockdowns in certain places which prevented a few miners from operating at all,” opines Poonam Kothari of Flawless Company.

Most jewellers rely on long standing relations developed with their suppliers to ensure unstinted supply of cut and polished diamonds. “In the last few months the prices of smaller coloured diamonds have increased and there has also been a drastic shortage of smaller sieves, comparatively the pear shape diamonds are easy to source since the movement in the market is slow for

After a while, diamond mining companies halt the mining process as it’s not profitable and hence in some time the prices get corrected, right now, this is the situation. The moment prices drop to a certain level then it becomes unprofitable. When we don’t get right goods, the only option is to pay higher price or wait for these goods to be available. We can’t use lower quality goods. If we have an urgent order then in rare cases we try and dismantle something from stock and complete the order. Ashish Goyal, Kotawala Fine JewelsDiamond manufacturing in India fell an estimated 30% to 40% following the second coronavirus wave in mid- March. The number of 1ct, D to H, IF to VS2 diamonds on several internationally acclaimed indices have fallen 7% since March 1. The volume of goods in that category is still 36% higher than at the beginning of the year, signaling that there is sufficient supply to satisfy short-term demand. Demand for polished inventory rose after a strong period of rough buying between November and March. India’s rough imports grew 44% year on year to $4.12 billion during the first quarter but declined in April due to the lockdowns, according to estimates.That should bolster prices when demand picks up for the holiday season. The outlook for retail is positive. US jewelers are seeing strong sales amid successful vaccination programs. Companies with strong multi-channel strategies can capitalize on continued e-commerce momentum as well as consumers’ desire to get out and shop in stores again. In the last few months the prices of lower colours have increased and there has also been a drastic shortage of smaller sieves, comparatively the pear shape diamonds are easy to source since the movement in the market is slow for this shape.

Supply of niche cuts is on the low
U.S. and China recovery is fueling optimism, but uncertainty persists due to the uncertain coronavirus situation in India. In Europe the uncertainty is relatively weak. A supply volatility is expected in the near future. Polished inventory levels are declining as manufacturers are reducing capacity and are focusing on 1 ct and larger diamonds. In the U.S. consumer confidence is up as compared to the pre-pandemic levels. In China pandemic regulations starting to ease. Government green-lights a travel bubble with Singapore beginning on May 26.

Supply shortages of 1.25 to 3.99 ct., F-J, VVS2-SI2 in fancies have been observed. Retailers are offering wider product ranges as consumers seek alternative shapes at more affordable prices than rounds. Dealers are witnessing increased sales of fancyshape engagement rings. There is a rise in orders for Ovals, Pears, Emeralds, Princess, long Radiants and Marquise. Excellent cuts are in demand and are selling at premiums. Steady orders are coming in from China, which is helping the market. Off-make, poorly cut fancies illiquid and difficult to sell are also getting sold, because of the shortage.

As a jewellery manufacturer, it has somewhat been positive because we are able to generate a larger turnover based on the fact that the cost of raw material has gone up which makes the entry points for buyers much higher. However, on the diamond distribution and trading front, certain clients are extremely specific, they always have a budget in mind and if it’s something they have been buying for many years, it’s difficult to ask them to pay a higher price Poonam Kothari, Flawless CompanyManaging steady supply of all varieties of diamonds has become increasingly difficult in this day and age. According to Poonam Kothari “Due to shortage of supply of rough diamonds – prices of polished diamonds have been increasing every month and in fact small sized goods have become much more scarce to source. As a result, sourcing has not only become more difficult but expensive also, certain specification diamonds are completely missing from the market, which means many orders are going unfulfilled. Travel restrictions to source goods internationally is also creating a hurdle.” The situation is tough and calls for some innovative strategies. Says Ashish Goyal, “When we don’t get right goods, the only option is to pay higher price or wait for these goods to be available. We can’t use lower quality goods. If we have an urgent order then in rare cases we try and dismantle something from stock and complete the order.

Overall, there is some shortage in every category but sourcing fancies has become more difficult as it is usually the primary focus for big manufacturers. “Also, certain investment type stones like D, FL, and VVS have witnessed prices escalating rapidly as many investors and high net worth individuals started buying those for investment purposes as well in order to diversify from the stock market to store their wealth,” explains Poonam Kothari.Dealers in the USA are positive amid stable trading. Melee strengthening in G-I, VS-SI ranges that are popular in wedding bands and fashion-jewelry pavé settings. 1 to 2 ct., G-I, VS-SI diamonds for engagement rings performing well. Fancy shapes improving as shoppers seek distinctive looks in post-pandemic period.

In order to deal with this uncertainty Poonam Kothari always keeps a good stock inventory of diamonds that is easily replaceable even with current production standards. “So the best option is to always try and source a similar specification for the client in case the exact match is not available whether it is one colour grade plus or minus. If that is not available as well, then we try to convince client to accept similar specifications with some fluorescence, either Faint or Medium. Recently, we have also suggested clients to select a diamond with certification from an alternative lab, for example from GIA they could switch to either HRD or IGI,” he informs.

A Catch-22 situation
With countries facing multiple waves there does not seem to be an exact timeframe of when prices will stabilize. But this uncertainty is causing overall decline in demand. In some regions of the world, market for fancies is seeing an upturn. In some places prices are rising as jewellers seek alternative shapes at more affordable prices than rounds. Dealers are witnessing increased sales of fancy-shape engagement rings. Across the world there is a rise in orders for Ovals, Pears, Emeralds and Radiants above 2 ct. Cushion, Princess and Marquise improving. Buyers are showing preference for elongated shapes with the right proportions. Excellent cuts are in demand and are selling at premiums. Steady orders are trickling in from China which is helping the market. Off-make, poorly cut fancies illiquid and difficult to sell too are getting sold because of lack of supply of niche cuts and existing market demand.

“Diamonds have impart a royal feel to every wearer. Therefore demand for diamonds will not fall,” beams Viral Kothari.Responding to the impact of rise in prices of roughs Poonam Kothari says “As a jewellery manufacturer, it has somewhat been positive because we are able to generate a larger turnover based on the fact that the cost of raw material has gone up which makes the entry points for buyers much higher. However, on the diamond distribution and trading front, certain clients are extremely specific, they always have a budget in mind and if it’s something they have been buying for many years, it’s difficult to ask them to pay a higher price. Some will agree to the increased prices, but when you see 7-10% jump in certain categories, and with diamond margins being so slim, you end up missing the sale.” On the flip side, if there is a certain diamond you have in your stock and there is an order for with which the specifications match, chances are higher that your diamond will be sold. As customers are not getting as many options to select from like before. Replacement cost is also higher, so if sellers are not able to achieve higher prices when selling, they would rather hold onto their inventory longer. “In the next 2 to 3 months I do see prices stabilizing but we would only get the much needed clarity once the situation in India improves and factories start operating at their optimum capacities” sums up Poonam Kothari.