Price Vs Demand How are diamond jewellery manufacturers managing Scarcity of niche goods?

World over demand for diamond jewellery is steadily rising, however manufacturing and certification of loose diamonds isn’t matching the demand levels. This is resulting in several forms of demand-supply inequalities. R Sugandha finds out from diamond business owners how this uncertainty is affecting their business

- R Sugandha

Diamond markets showed a mixed graph in April. A good business recovery in the U.S. and China drove optimism, but sentiment weakened due to the spike in Covid-19 cases in India. Surat-based manufacturers reduced capacity as infection rates rose. Grading labs experienced a backlog because of operating restrictions. Lower inventory levels supported polished prices. Prices for 1ct diamonds increased 2.5% during April and were up 4.2% from January 1.

According to Viral Kothari, founder and director, Kosha Jewels, “Diamonds are always on top when it comes to demand. No matter what. This is because diamonds are eternal. When we think about giving a loved one a piece of jewellery as a memorable gift, the first thought is about diamonds. Also because of the current situation, people haven’t been able to spend on vacations or weddings, so that’s why during these times also people feel that it’s a wise decision to invest their savings in buying diamond jewellery which will be an investment for life.”

Demand- supply tango continues

Supply and demand dynamics play a great role in price determination. Explains Ashish Goyal, Kotawala Fine Jewels, “After a while, diamond mining companies halt the mining process as it is not profitable and hence in some time the prices get corrected, right now, this is the situation. The moment prices drop to a certain level then it becomes unprofitable.”