Shine: Indian Diamond Demand Grows Faster Than China, DTC Acts Against BPP Violators

(IDEX Online News) - Indian diamond jewelry consumption is growing faster than China’s, according to Diamond Trading Company (DTC) CEO Varda Shine. Speaking to the media in Mumbai last Monday, she noted that in 2010, diamond jewelry demand in China grew 25%, while Indian demand grew 31%.

In the last five years, she said, diamond jewelry demand in India had grown 50%. Moreover, this year, Indian diamond demand is expected to grow by at least another 20%. Shine and a DTC team are currently in India conducting their annual business review of Indian Sightholders.

Shine said that on a tour of jewelry retailers in Delhi, Bangalore and Mumbai, she found that there had been a strong migration to diamond jewelry. Indian diamond consumption was currently 10- 11% of global consumption. It was worth noting, she observed, that the growth in Indian demand was based on the consumption of small diamonds in large volumes — 80% of the carats consumed in India are small diamonds. In contrast, 80% of the carats consumed in China were of 0.5 carat and larger.

Together with the demand growth in India and China, the U.S. market, still accounting for 38% of global diamond consumption, was experiencing a strong bounce back. According to Shine, the U.S. market is expected to grow “in the high single digits” this year. Juxtaposed with the fact that no world-class diamond mine had been found in the last decade, demand is set to outstrip supply in the near future, resulting in a strong upward pressure on polished prices.

All these factors put together she said, had led De Beers to dub this the diamond decade.

Shine observed that De Beers’ own mine production was almost back up to full output — mine production this year is projected at 38 million carats — because of the strong demand. In response to a question, she said that demand was so strong that even if the current impasse over the export of diamonds from Zimbabwe were to be resolved soon and rough from that country came onto the market, it wouldn’t change the fundamentals of the market and there would still be a gap between demand and supply.

She added that De Beers wanted a resolution of the Zimbabwe problem as soon as possible and hoped that the Kimberley Process (KP) meeting called specifically for this would be able to come up with a solution.

In the absence of a solution and a clear KP mandate, she said, De Beers’ stipulation to clients that they maintain best practice principles (BPP) meant that they should not trade in or process these goods. Shine revealed that though it didn’t make this public, De Beers had initiated strong action against those clients who had violated BPP norms.