Outlook of cut and polished diamond industry made negative

Mumbai, Ta. Friday February 21, 2020

The impact of the coronavirus in China and slow demand in key markets will have a significant adverse impact on the country's diamond industry. In view of the adverse effect, a rating agency has negatively outlined the Outlook for the country's cut and polished diamond industry. This observation has come about in China and Hong Kong following the current closure conditions.

China accounts for 5% of global polished diamond consumption. About 5% of the major exports from India to China are currently exported through Hong Kong. In addition to China's coronavirus, the cut and polished diamond industry has been under pressure for some time as a result of sluggish demand.

Gross margins have also come under pressure due to falling prices of processed diamonds. If trade activities in China are closed for long periods of time, the long-term impact may be seen. Demand will also be delayed in recovery, the agency said in a report.

Retail sales of jewelery in China have dropped by about 5 percent. In the first nine months of the current financial year, India's cut and polished diamond exports have declined by 5.5 percent. Now, due to the impact of coronavirus, exports are still likely to decline. Cut and polished diamond traders will also have an impact on cash flows. Delays in payment and wages have become a matter of concern for the diamonds industry at present.

While India's diamond industry is still emerging from the impact of the hurricanes in Hong Kong on the 5th, Coronavirus has recently lost the industry's New Year's business math. Hong Kong authorities have forced some Diamonds trade shows to be postponed until May, sources said. After Nirav Modi's case, the banks have taken great care in financing the diamond industry which has resulted in the jewelers having difficulty meeting their working capital requirements.