The US jewellery market appears to be in the doldrums and given that it accounts for 35% of world jewellery sales, that fact has a lot of people worried, not least the Indian diamond cutting and polishing industry.
What’s worrying them most is the fact that US clients who’ve bought diamonds are delaying payments endlessly. The lack of cash inflows has exacerbated the already severe liquidity crunch in the Indian diamond market – as we’ve reported in our DiamondScan market report. Faced with wafer-thin margins and lackluster demand from their usual markets, Indian diamantaires have been diverting any spare cash they have to other fields that offer more juicy returns on investment. The booming Indian stock- and real estate markets have been magnets for diamond money.
Industry pundits say the situation is a good thing for two reasons – first in that it has the effect of inhibiting speculative and rough buying at unrealistic prices and second in that if some players find greater success in other fields, it might ease the pain of the ongoing shakeout in the diamond cutting industry. There are too many cutting shops and not enough rough to go around right now.
With many US analysts predicting that the Christmas season this year is not going to be all that great, 2007 looks like being a crunch year. Rob Bates asked in his blog whether the JCK Las Vegas show might come to the rescue of the depressed US market. The Indians aren’t expecting anything.
