Chinese demand pushes up prices of polished diamond

The Chinese demand has led to a sharp rise in the prices of some types of polished diamonds in the past one month. About 5% rise has been seen in prices of polished diamonds and this has directly boosted the production in the diamond production centers of Gujarat which were down after the fall of domestic demand due to demonetization of high currency notes by Indian government last year.

The industry experts feel that that the demand will improve by FY18 but the increasing gold prices is a reason to worry. The cost of production will also increase as the rupee is stronger. Demand from China and US is increasing and this trend is good for the industry. The demand of Polished diamonds is on a rise and the prices of rough stone have also gone higher by 2-3%.

The diamond merchants have imported more rough stones in February 2017 as the Chinese New Year was approaching and the demand was expected to rise. As per data from GJEPC, in February 2017 rough stones import was at 17.8 million carats which were 14.1% more than 15.6 million carats import in February 2016.

The domestic demand that had fallen after demonetization has also improved as shown by the smaller diamonds that have firm prices in the local market. Many large manufacturers are using full capacity to prepare for the Las Vegas diamond show that is coming up in June first week.

Gold is a major raw material in diamond jewelry and prices of the yellow metal have been steady with ongoing tensions over North Korea missile program. Spot gold has been around $1,284.56 per ounce after the $1,295.42 which was the last highest rate seen on November 9th.

About 80% of the financial transactions have been moved to cashless modes by the traders. Surat Diamond industry is calculated to be of about Rs 90,000 crore.