India Urges 'Self-Discipline' from Rough Buyers

RAPAPORT... Indian industry leaders have renewed their calls for limits on rough imports during the Covid-19 crisis, noting that diamond demand remained uncertain.The Gem & Jewellery Export Promotion Council (GJEPC) and four other trade bodies have told members to "maintain self-discipline" and only to buy rough in line with current demand. They also urged them to "exercise great caution" and to continue reducing their inventories and debts.Polishing factories in Surat are operating at 20% to 30% capacity, the organizations said Friday in a letter to members, predicting that it could take "a few months" for the situation to become more normal. Meanwhile, retail demand is slow and the health situation uncertain, they added."Maximizing short-term gains at the cost of an overall market deterioration would be unwise in today's uncertain times," the groups explained. The other organizations behind the plea are Mumbai's Bharat Diamond Bourse, the Mumbai Diamond Merchants Association, the Surat Diamond Bourse, and the Surat Diamond Association. The latest instructions are softer than the trade bodies' earlier directives, which recommended a total pause on rough imports. They initially endorsed a 30-day freeze from May 15, before delaying the directive until June 1. They then introduced a 10-day window at the start of July for members to ship in goods, while still advising against imports between July 10 and 31.The country's rough imports fell 83% year on year to $481.7 million in April to June, according to data from the GJEPC, outpacing the drop in polished exports, which fell 50% to $1.8 billion for the same period. The efforts to reduce supply have helped India navigate the coronavirus crisis by minimizing inventories and debt, bringing polished-price stability, the groups said in a virtual meeting Wednesday. The GJEPC will also write to the large mining companies to thank them for offering flexibility to rough buyers and to ask them to continue these policies. De Beers and Alrosa have both allowed contract clients to defer 100% of their supply allocations during the pandemic, leading to a sharp collapse in the volume of rough reaching the midstream. The trade groups will review the situation again in a month.Image: Rough diamonds. (Shutterstock)