De Beers arm fears slowdown in diamond market

DTC,the marketing arm of the worlds largest miner and supplier of diamonds,De Beers,is expecting a slowdown in diamond market this year

Diamond Trading Company (DTC),the marketing arm of the worlds largest miner and supplier of diamonds,De Beers,is expecting a slowdown in diamond market this year. The diamond market in India the largest exporter in the world alone would go up by 20 per cent in 2011 as against 31 per cent last year (2010),DTC chief executive officer (CEO) Varda Shine said here on Monday.

We expect a slight slowdown in the current second quarter… we hope the industry in India will grow by 20 per cent this year as against 31 per cent last year. Despite this projection,we have seen that there are good fundamental reasons why the market is in such a buoyant position, Shine told The Indian Express.

Explaining the fall in demand growth in the current year,Shine said,Actually,our growth forecast is 20 per cent this year,rather greater than 20 per cent. It is a forecast… We still expect a double digit growth in this industry in India and China as well every year.

Industry estimates,however,reveal that DTC prices have gone up over 300 per cent in some select categories of diamond after the 2008 financial downturn. Prices of 6-7 popular diamond categories have increased more than 300 per cent in the last 2-3 years. On an average,it has increased by an average by 15 per cent to 20 per cent during the first quarter,following a rise of 27 per cent through the whole of 2010,while sales increased by 10 per cent to approximately $1.75 billion during the three months, said a diamond trader who declined to be named.

However,Shine declined to comment on prices and sales data in detail,but stressed that the increases were reflective of trends seen in the polished market. As far as prices in the Indian polished diamond are concerned,I think it has gone up by just 100 per cent since Diwali (November), she said.

She said rough diamond prices would continue to reflect conditions in the market despite the steep increases experienced in the first quarter of 2011. Our prices are still based on fundamentals. The current second quarter though could prove to be a slight slow growth,but we have seen that there are good fundamental reasons why the market is in such a buoyant position, Shine said.

As per DTC observations,India and China are two giving countries and consumer demand in these Asian countries is better than expected demand in the US in the fourth quarter of 2010,contributed to the current strong trading environment.

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Over the last 4 years,jewellery business in India has gone up by 60 per cent. It is quite a different market here. As a result,in 2010,the growth of diamond markets in India and China have gone up 31 per and 25 per cent respectively, Shine said.

DTC is hopeful that this year is going be an important year for the company. The company plans to renew the contract for sightholders.

This year will be our selection year for sightholders which will happen in December this year. As our sightholders contract ends in March 2012,we will select sightholders in the new contract whose tenure will start from April 2012 to March 2015, Shine said.