Indian manufacturers in the diamond industry are facing a crisis as polished prices fall and sightholders struggle to make profits. On the other hand, American dealers are experiencing a better market with demand from retailers, albeit not at peak levels. The discrepancy in these trends can be attributed to various factors, including changing consumer preferences, supply conditions, and inventory levels.
The market crash last year was caused by a combination of factors such as synthetics, inflation, and high interest rates affecting consumer demand in the US. India saw a voluntary freeze on rough imports in 2023, which temporarily improved the situation but did not address the underlying issues. Despite a modest recovery in trading in early 2024, inventories continued to rise sharply.
Indian manufacturers are struggling to sell their goods, even at reduced prices, as dealers and retailers are only buying for specific needs. This has led to a mismatch between polished prices and rough prices, resulting in losses for manufacturers. The situation is further complicated by high inventory levels in India and slow demand in China.
However, American dealers have been able to navigate the market challenges better due to healthier inventories and a more nimble approach to buying and selling. Structural differences, such as reliance on debt and cash flow needs, also contribute to the divergence in market conditions between India and the US.
As the industry looks to address these deep-seated issues, there is a call for more marketing efforts to promote consumer confidence and end demand. Indian manufacturers are shifting their focus towards enhancing marketing rather than repeating import freezes as a temporary solution. In the midst of this crisis, the industry is facing the need for fundamental changes to adapt to the changing market dynamics.
