Global meltdown rubs off the sheen from Indian diamond industry

India's diamond industry seems to be losing its sheen with global recession hitting its exports.

Those associated closely with the industry at Surat in Gujarat are struggling to survive the current recessionary trends.

The traders say that the diamonds processed in Surat are sent to various parts of the world including the Middle East from where manufactured jewellery is then sold across the globe.

The US, one of the largest markets for diamonds and other gemstones, would import 60% of diamonds manufactured in Surat. But these imports have come down by half due to deep economic crisis that America is currently reeling under.

With the financial turmoil spilling over to the rest of the world, the demand for diamond jewellery is declining in the international markets. Diamond traders said that domestic markets too are no better and don't see any respite in the near future.

"Due to the global recessionary trends the diamond industry world over is facing problems and so is our fraternity in Surat. The effect is being feltmore than ever before and we are trying to fight it. But how long would the industry be able to fight it and survive, it is a matter of concern. I don'tsee any respite in the near future," said CP Wananai, President, Diamond Association, Surat.

The Surat diamond industry is worth Rs800,000mn and accounts for more than half of the total diamond exports from India. It employs more than 700,000 workers from across the country. Over 2.5mn people are indirectly associated with the trade. These workers are uncertain about their jobs. The one-month annual vacation that these workers get during Diwali, the Hindu festival of lights, is being extended, sparking off fears that many companies might have to close down.

"I have been in this industry for around 10 years now. We have already had a vacation of 40 days now. My salary is just Rs7000 per month and I had spent almost all of it during the festive season. I don't have anything now. I am somehow trying to survive. The situation is really bad. I don't even want to think about what can be done if the situation doesn't improve," said Manish Bhai, a diamond worker.

With the 40-day vacation ending on Monday (November 17), the diamond unions are scheduled to meet to discuss the situation and likely possibilities to save the livelihood of the millions of workers associated with diamond trade. Reducing the number of working hours and decreasing the salary proportionately are among various options being thought of as against laying off of workers.

Meanwhile, the diamond industry is lobbying hard to get a bailout package from the government. India's diamond industry has been reeling under a spate of problems. Around 2,000 factories out of 10,000 have already shut down.

The worst-hit diamond cutters and polishers have not yet lost hope about the markets regaining their lost glitter but feel that would take a couple of months.

Jewels, watches set to fetch lower prices at auction

While the world is facing the biggest global financial crisis since the Great Depression, experts are confident the best diamonds and rare gems tofetch good prices in Geneva.

Sotheby's are offering over 400 luxury jewels in their autumn "Magnificent Jewels" sale. Sotheby's are confident their autumn jewels auction will sell well, although price levels for some luxury pieces have dropped by 20-30%.
"The volatility in all markets at the moment is quite remarkable, nobody can see which way this market's going", David Bennett, Sotheby's jewellery chairman for Europe and the Middle East told Reuters.

Sotheby's has had to reduce estimates for the flagship jewel auctions as a result of the world's financial crisis that has reduced appetites for luxury goods.

But while many lots were stranded in New York's Autumn art sales, which failed to meet low-end estimates the two best diamonds are expected to fetch good prices on Wednesday evening (November 19).

The jewel auction market is driven by top-end diamonds, which brokers and leading fine jewellers say have come off price peaks touched earlier this year to more sustainable levels.

"There is a historical precedent, because the last recession, if you like, was straight after the Gulf war, the first Gulf war in 1990. And between 1991 and 1997 were our greatest years of jewellery sales, including the three world records-the biggest diamond sales of $16mn,were in those years, 1990, 1993 and 1995, so there is maybe a precedent that people will look to diamonds, I'm pretty optimistic", Bennett said.

Sotheby's estimates that its star lot, a flawless deep blue diamond weighing 10.48 carats, could fetch $6mn to $9mn. And the Lesotho I, a light brown diamond of 71.73 carats mounted on a ring, has a catalogue estimate of $3mn-$5mn.

Discovered by a miner's wife in Lesotho in 1967, it was the largest of 18 to be cut on live television from a 601-carat rough diamond by US jeweller Harry Winston. It has remained in the gem box of an unidentified "lady of title" ever since.

The week kicked off Sunday night with Sotheby's sale of 200 timepieces.

Israel Diamond Exchange celebrates 70th Anniversary

Ramat Gan, Israel, November 24, 2008: The Israel Diamond Exchange (IDE) celebrated its 70th anniversary last night at a gala event in the Mann Auditorium in Tel Aviv with the participation of thousands of diamantaires from Israel and abroad.

Special guests included Israel’s Minister of Industry, Trade and Labor Eli Yishai; Ramat Gan Mayor Zvi Bar; DTC Managing Director Varda Shine; Chairman of the World Diamond Council Eli Izhakoff; CIBJO President Gaetano Cavalieri and representatives from diamond exchanges in China, the U.S. and Europe.

Avi Paz, President of IDE and the World Federation of Diamond Bourses, thanked the many guests who came from all over the world, and said that their participation was a tribute to the importance of the Israeli diamond center within the world diamond industry.

About the world economic situation, Paz said: “At this time we must maintain our optimism. What we achieved over the past 70 years did not come easily! Our industry has gone through difficult times as well as periods of huge success and prosperity. At this time it is especially important to act with determination, optimism and cool-headedness.”

In his remarks Paz called upon Minister Yishai to act immediately to ensure that the Government’s emergency economic plan provides solutions for diamantaires harmed by the world economic crisis. Minister Yishai said that he would continue to do everything in his power to support the diamond industry. “Your leadership is a very special one – filled with wisdom, professionalism and modesty. You pursue your vocation with resoluteness and during this difficult time you are showing vision, determination and conviction. I believe in your abilities and I will always be at your service in all positions that I will hold,” he said.

Managing Director of Israel Discount Bank Giora Offer said that the Bank would stand firm in its support of the Israeli Diamond Industry. “I believe that you will continue to act in times of crisis with ethics, credibility and loyalty. Israel Discount Bank, the largest bank in the finance of Israel’s diamond industry, stands beside you. Together we will get through this period with a great deal of appreciation and esteem for your achievements of which we are all proud.”

One of the highlights of the evening was the bestowal of Honorary Membership in the Israel Diamond Exchange to DTC Managing Director Varda Shine. Avi Paz said: “Varda Shine is a pioneer in the global diamond industry. She is the only woman in the history of IDE to receive Honorary Membership. Varda is an excellent professional, a keen businesswoman, and above all a true friend of the Israel Diamond Exchange and the entire Israeli Diamond Industry.”

Shine thanked Avi Paz and the IDE for this award. “It is a great honor for me to receive this title and I feel proud to be the first woman to hold it,” she said. “The Israel Diamond Exchange has all it needs to succeed. Thanks to your human capital, entrepreneurship and strength you will know how to continue your path forward. We must all learn from the diamond during this period – to be transparent, clear and strong,” she added.

Shine reiterated that De Beers would significantly reduce the supply of rough diamonds in the near future and stressed that especially in these times it is important to remain optimistic. “The future of the diamond looks excellent, largely because there are no new mines in the world and the diamond is becoming rarer and rarer. At the same time, research is showing that during 2011 a growth in demand for diamonds is expected in countries with a developing middle class.”

Indian jewellers in recessionary pain: Reuters

Jaipur jewellery manufacturers and exporters are in a recession pain. Gobal recession disease have caught the traders and the very first symptom is falling export orders.

Until last year traders dealing in gems and jewellery segment were earning huge profits. But now the situation has reversed, gem city is facing an adverse impact of recession in the global economy.

Recession has directly hit the jewellery manufacturers and exporters as there is no more order booking coming from the offshore buyers. Jeweller exporters fear the impact would be felt in the coming quarter.

"As far as global recession is concerned, people are thinking that the sales may go down. If the sales go down during the Christmas season, then the impact can be seen in the next quarter," said Jagdish Tambi, Spokesperson, Jaipur Jeweller's Association.

Majority of the jewellery is exported to the US and the there has been a sharp fall in the quantity of export due to recession in the US. Falling exports has also resulted in sizable retrenchment of workers in the jewellery industry.

"There are a lot of people who have lost jobs because export orders have been cancelled. Lesser order, lesser work, every body can feel the impact. It is not that the recession is affecting the US only," said Sudheer Kasliwal, an exporter.

What started in the US about 18 months ago as a housing mortgage crisis has slowly engulfed the whole world and India is no exception.

Gold prices climb due to global economic slump: Karvy Comtrade

Gold prices traded in the range of $729.6-$802.8 a troy ounce, as the firmer US dollar propelled a volatile movement in the precious metals sector. The slump in equities in conjunction to the deepening crisis has eroded the investor confidence, thereby proving negative for the precious metals. The price of crude oil dropping below $49 a barrel renewed speculation that a global recession will cut demand for precious metals and raw materials. The dollar rose against the euro as prices paid to U.S. producers plunged and homebuilder confidence fell, increasing demand for the safety of government debt indicted by the substantial increase in TIC flows.

However, prices erased earlier losses and moved higher on speculation the Federal Reserve will lower interest rates to stimulate the U.S. economy, boosting the appeal of the precious metal as an alternative asset. The yield on two-year Treasury notes dropped below 1 percent for the first time ever on bets the Fed will cut its benchmark rate next month. The poor housing sector performance, steep increase in jobless claims and contracting manufacturing activity helped gold prices to move higher. On the weekend, gold prices climbed as the global economic slump dragged down asset prices and boosted the appeal of the precious metal as a store of value.

According to the world gold council, the demand for the precious metal increased 18 % in the third quarter as lower prices encouraged purchases by jewelers and as investors sought a haven from the credit crisis. So-called identifiable investment, which includes purchases through exchange-traded funds and of bars and coins, climbed 56 % to 382.1 tons during the quarter.

Other precious metals, which have wider industrial applications than gold, fell on concern that a global recession may damp demand for all commodities. The International Monetary Fund projected that economies in the U.S., Japan and the euro zone will all shrink in 2009.

This week, fundamentally we expect gold prices to trade sideways amid lower US GDP growth (P), declining home sales and durable goods orders. The gains are likely to be limited by the strengthening dollar and poor economic condition in euro-zone.