Gems & jewellery export down 20% in April

India’s gems & jewellery exports slumped for a fourth consecutive month in April, owing to weak global demand and seasonal adjustments. Data compiled by the Gems and Jewellery Export Promotion Council (GJEPC) showed these exports plunged 20 per cent to $1,979 million in April from $2,476 million in the corresponding month last year.

These exports started falling in January, as buyers from the US stayed away due to concern about the global economy and an impending rate increase by the US Federal Reserve. The US imports 38 per cent of all jewellery produced globally.

“The global market sentiment has been weak for the past few months, which was reflected in gems & jewellery export. With the lean season (June-July) approaching, overall jewellery export is likely to remain subdued in the first quarter. However, the sentiment will start recovering thereafter,” said Vipul Shah, chairman of GJEPC.

There has been substantial disparity between the prices of rough diamonds and those of polished ones. “Rough diamond prices remained elevated, as miners raised prices frequently in the past few months. But polished diamond prices did not surge proportionately due to weak consumer demand, leading to disparity. Therefore, processors’ margins continued to be squeezed. Now, miners have realised the market cannot absorb frequent price growth at a time when jewellery demand is subdued. So, they have started cutting prices to bring rough diamond rates in tune with those of polished ones, which will bring the market on track in a few months,” said Shreyas Doshi, chairman of Shrenuj & Co, one of India’s largest gems & jewellery exporters.

Sources say global miners have cut rough diamond prices by five per cent in the past two months. Traders and processors say another five per cent cut is likely in the next few weeks, likely to boost trade sentiment. “Demand is expected to be back by August as a result of a cut in the prices of roughs. So, we expect jewellery demand to resume in the next three months,” said Doshi.

For the labour-intensive diamond processing sector, another worry is a steep fall in the import of rough diamonds in the past four months. “This is because of seasonal adjustment, as foreign demand weakens in the monsoon season,” said Mehul Choksi, chairman and managing director of Gitanjali Gems.

Typically, gems & jewellery demand resumes in August, when actual orders start flowing in from foreign buyers for delivery of goods by October-end, ahead of Christmas and New Year.