Revenge consumption: Surat diamond units working overtime to meet US demand

Revenge consumption of diamonds from the US is driving manufacturing units in Surat to work overtime to meet the demand. There has been a shortage of rough diamonds as the diamond mines had remained closed due to the pandemic and the stocks at Surat had depleted after the units reopened but the situation has reversed. Now the diamond exporters have to run the units beyond normal schedule to meet the rising demand which has come from the US.

The exporters said that demand for the Chinese New Year is expected to come in shortly. The Chinese New Year in 2021 falls on February 12. This year, the diamond sales were affected during the New Year in China due to the outbreak of coronavirus.

Botswana, where some of the biggest diamond mines are located, has just opened up for viewing and trading of rough diamonds but travel bans in many parts of the globe is keeping the Indian diamond trade away from direct transactions with the miners. Combined diamond reserves in Russia, Congo and Botswana account for at least 80.6% of the world’s total diamond reserve 1.1 billion million carats.


“Americans have not been able to travel due to the pandemic. Also, their government has given a lot of Covid-related financial assistance. They have saved a lot of money which they are now using to buy diamonds. The demand is robust from the US. At Surat, many units are working overtime to meet the demand. After a gap of three to four years, diamond trade is witnessing recovery,” said Sevantibhai Shah, owner of Surat-based Venus Jewels.

There are 5,000 diamond cutting and polishing units in Surat.

The diamond industry had opted a voluntary ban on import of rough diamonds in the months of May and June to reduce the stock of the precious stones.

The diamond trade is not even fully using the line of credit from the banks because of the high demand for polished diamonds.
“Buyers are paying instantly for polished diamonds,” exporters said.

Colin Shah, chairman, Gem & Jewellery Export Promotion Council said the demand is good from the US, Eastern Europe, Bahrain, Dubai, China and Korea. "Demand is reviving in a big way in India, too," Shah added. The news of the availability of a Covid vaccine has also raised the hopes of the gem and jewellery exporters.

Vipul Shah, managing director of diamond exporting firm Asian Star said "Market sentiment has improved as everyone is expecting the Covid vaccine by end of this month. Equity markets across the globe are showing a positive trend. This has improved consumer sentiment as well."

The miners too are seeing a revival in rough diamond demand. Jim Vimadalal, director at Russian diamond miner ALROSA's India office, said "Rough prices are holding up as trading volume has increased. Liquidity, stocks and profitability of most of the Indian diamond manufacturers are healthy. Demand for rough diamonds from our key clients in November remained strong enough as they bring their stocks to the normal levels amid the seasonal growth in demand for diamond jewellery in the USA and China. “High season” of Christmas and New Year sales traditionally supports the market towards the end of the year”