China, India demand firm diamond prices: CRISIL

02 May 2011

Diamond prices, which have witnessed a sharp rebound over the past year, will remain firm over the medium term because of increasing consumption in the emerging markets of China and India and recovery in the US market.

According to rating agency CRISIL, supply of rough diamonds is expected to tightly match the demand. The credit risk profiles of 114 CRISIL-rated diamond and diamond jewellery players are expected to remain stable on the back of buoyant demand outlook.

China and India, the fastest growing markets in the world, are likely to continue with their double-digit growth in the medium term. The markets in China and India, have grown by around 25 per cent in 2010, and contributed to around 20 per cent of the global consumer demand for diamond jewellery in 2010, as against 12 per cent in 2008.

Says Gurpreet Chhatwal, director, CRISIL Ratings, ''China and India are at an inflexion point and will see a structural shift in consumer preference for diamond jewellery over the long term, resulting in a strong demand growth.''

Jewellery sales in the US market, which accounts for around 40 per cent of the global diamond consumption, is estimated to have increased by 7 per cent in
2010, driven by recovery in consumer spending and inventory restocking by retailers. The US market is likely to sustain the recovery in consumption over the medium term.

Prices of polished diamonds have increased by more than 30 per cent over the past year, in line with the rise in prices of rough diamonds.