You may have to shell more for diamonds this wedding season
Planning to buy some diamond jewels this wedding season? Get ready to shell out more. Rachit Vats reports.business Updated: Jun 04, 2013 01:22 IST
Planning to buy some diamond jewels this wedding season? Get ready to shell out more.
Thanks to the recent 4-5% surge in the prices of rough diamonds, consumers may end up paying more for the final, polished product. The demand-supply mismatch in the global markets is further adding to the shortage.
“Worldwide, the demand for diamonds is far higher than the current production, leading to a shortage. This is happening more in markets such as the US and Japan, where affinity for diamonds is higher. A fall in mining activity and the absence of newer sites are leading to the shortage,” said Mehul Choksi, chairman, Gitanjali Gems.
“The recent diamond shortage has been artificially created by those involved in the cutting and polishing of the stone. Even the goods available are of poor quality,” said Bina Goenka, a Mumbai-based diamond retailer.
With most factories being closed for the summers, manufacturing levels are also relatively low. This, coupled with high interest rates and tough market conditions are forcing traders to earn higher margins by creating a shortage and jacking up prices, say industry officials.
According to experts, the recent fall in gold prices may further offset the demand for diamonds during the coming wedding season.
“The decline in gold prices has doubled our volume growth. Whenever there is a sharp decline in the price of gold we find that the consumers come out in big numbers to buy because there is a fear psychology that makes them buy before prices rise. It becomes a big contributor to the top-line of the company and consequently to the operating margins and the bottom-line of the company,” said Prem Hinduja, CEO, Tribhovandas Bhimji Zaveri.
First Published: Jun 03, 2013 21:09 IST