Here’s How Diamond and Other Bullion Metal Industries are Affected by Coronavirus

The Indian manufacturers are contemplating a one-month voluntary suspension of rough imports from May 15 onwards
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

  • |
  • May 06,2020
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  • 11 Mins Read

Due to the widespread Coronavirus and following global lockdown, trading of diamonds was restricted globally. This, in turn, weakened sentiments as dealers were agitated since they could not restart business operations. The diamond industry primarily focused on the Far East as Hong Kong and China recommenced their diamond industry, while the viewpoint of the US is still uncertain. 

According to The RapNet Diamond Index,1-carat diamonds were basically flat for April owing to the low volume of trade. The index was below 8.5 per cent since the beginning of the year.

While 0.50 carat diamonds was down 0.7 per cent in April and down 5.6 per cent in Jan-May 2020. On the other hand, 0.30 carat diamonds plummeted by 1.0 per cent in the last month and 4.2 per cent in the period between January to May 2020. 

The Impact of Pandemic on Indian Diamond Industry 

The diamond industry is trying to reduce supply to keep up the market whereas the Indian manufacturers are contemplating a one-month voluntary suspension of rough imports from May 15 onwards. Miners have presently ceased operations or decreased production. While some mines have been put down on care and maintenance and are not likely to restart operations at present low prices. On the other hand, mid-tier miners are under pressure and unlikely to generate the cash required for their debt payments.

According to the Rapaport Research Report's estimation, global rough production in 2020 is projected to decline 16 per cent to 119 million carats by volume and 29 per cent to $8.5 billion by value, the lowest level since the 2009 recession. 

As per the cited report, there is enough rough and polished to meet the demands as trading centers begin to reinitiate. Lockdown restrictions have been relaxed in Belgium and Israel whereas India has permitted select manufacturing in Surat and special shipments to Hong Kong.

Normalcy in the business can return gradually. It will take some time for the demand levels to reach the demands levels prevalent during pre-pandemic. The diamond industry has got a new opportunity to remould its messaging as customers are valuing the firms developing meaningful nexuses and rapports. Thus, infusing money in marketing is a prerequisite for this industry to finance itself and make sure of long-term growth.

 Gold Record a Steady Growth During Lockdown 

Gold prices in the country have reduced today but stood in a narrow range after recording a moderate shrink in the previous session. On MCX, June gold futures fell about INR 100 to INR 45,650 per 10 gram. However, the price of Silver has risen, with July futures on MCX rising 0.5 per cent to INR 42,134. In global markets, gold prices slipped today as risk sentiment improved amid gradual reopening of many economies. A firmer dollar also weighed on prices, reported Mint. 

Spot gold fell 0.1per cent to $1,704.88 per ounce. Equities have surged higher as many nations have preliminary relaxed restrictions on lockdown this week. Comparatively, platinum has slipped 0.2 per cent to $763.05 per ounce, while silver slipped 0.1 per cent to $15.01 per ounce.

At the same time, demand for gold continued to remain high. The holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4 per cent to 1,076.39 tonnes on Tuesday.

"Gold has managed to hold near $1700/ounce level but is struggling to gain traction due to mixed factors. Supporting price is increased US-China tensions, concerns about health of major economies amid disappointing economic data, rising virus cases worldwide, loose monetary policy stance of major central banks and continuing ETF inflows," Kotak Securities said in an interview with Mint. 

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