De Beers lowers prices of rough diamonds
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The recent decision by De Beers, world's largest diamond mining company, to reduce prices of rough diamonds by close to five per cent, has caused concern among Indian diamond traders — already hit by sluggish growth — as most would suffer losses on the diamond inventories they are holding.
''Many of the traders would have to face some inventory loss as they would be straddled with products bought at a higher price than the prevailing market rate,'' Gem and Jewellery Export Promotion Council's chairman Bakul Mehta said.
The Diamond Trading Company (DTC), the marketing arm of De Beers, had lowered the prices of small diamonds by 5 to 7 per cent at its July sight. The diamond company distributes diamonds to distributors called sightholders at events called as sights. The company holds 10 such sights held at an interval of five weeks at which close to 93 sightholders participate.
The increasing clout of Indian diamond tarders is evident from the fact that over 40 per cent of the sightholders are of Indian origin while 12 Indian companies are listed as sightholders.
Industry trackers, however, feel that Indian diamond companies would benefit by the move in the long term. ''The price cutting move will benefit the sector. You will have new goods coming at the right prices which could be made available to customers at acceptable prices,'' Mehta added.
The prices of rough diamonds have been on an upswing from 2002 and this is the first instance that diamond prices have been brought down. The industry has been plagued by problems, including rising rough diamond prices and shrinking margins of diamond polishers.
''The problems of traders is generally for the short term. However, this price cut is nothing, the company still ought to shave off a lot from its premium to attain a price that is marketable,'' Mumbai Diamond Trader Association president Navin Mehta said.
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