There is also a scarcity in the supply of rough diamonds as the mines are taking time to come to full production after lockdowns. It takes at least seven to eight months for the mines to become fully operational after a shutdown. This has resulted in rough diamond prices moving up by 2-3% every month since the beginning of this year.
“As of now things look good. But the rising number of Covid cases in some of the major diamond consuming global markets remains a matter of worry,” said Vipul Shah, managing director of diamond exporting firm Asian Star. “Cases are rising in Southeast Asian nations, which are major markets for us.”
Indonesia, Malaysia and Thailand, as well as parts of Japan, including Tokyo where the Olympic Games are set to open Friday, are reporting an increasing number of Covid cases.
The worry among the exporters comes at a time when diamond shipments have bounced back to the pre-pandemic levels.
Gross exports of gems and jewellery grew 8.46% to Rs 67,265.66 crore during April-June this year, compared with Rs 62,018.48 crore in the same period before the pandemic in 2019, according to figures released by the Gem & Jewellery Export Promotion Council (GJEPC). Exports of cut and polished diamonds increased 26.45% to Rs 45,741.52 crore from Rs 36,173.89 crore in the April-June quarter of 2019.
The GJEPC has not compared the figures with the same period last year, when many parts of the world including India were under lockdown.
Shah, who is also the vice-chairman of the GJEPC, said the supply of rough diamonds from the mines has been less compared with demand.
Jim Vimadalal, the India head of Russian diamond miner ALROSA, said the market for rough diamonds has entered a long period of supply deficit.
“Demand for rough diamonds remains high. Diamond jewellery enjoys strong demand across all the key markets while rough diamond stocks at the Indian mid-stream segment are kept low,” Vimadalal said.
Rough stocks with miners have hit “rock-bottom levels” as supply dropped at a number of assets, he said. “Like-for-like price index for rough diamonds has significantly recovered year-to-date to pre-Covid level.”