Indian diamond manufacturers are planning a curtailed Diwali break as they scramble to fulfill US holiday orders amid a shortage of polished.
Factories will shut for five to 12 days instead of the usual two to three weeks, aiming to offset months of inactivity due to Covid-19, manufacturing executives said [the week of october 19th]. Demand is growing ahead of the Christmas and Chinese New Year seasons, while workers are keen to limit their vacations after receiving reduced pay during the pandemic.
“Business has picked up and this is the season time, so people don’t want to miss out on the orders,” explained Rahul Jauhari, senior vice president of global sales and marketing at Star Rays, a Mumbai-based manufacturer. “For two months during lockdown, sales were negligible. People are looking to compensate in some way.”
Diwali, which this year occurs on November 14, traditionally kicks off a vacation period lasting several weeks. In recent years, cutting firms have been in no hurry to return from the break as there were already enough diamonds on the market. However, this year businesses are focused on making up revenues after an unprecedented slowdown in production and sales.
Workers in the diamond-cutting hub of Surat usually return to their home villages for the festival, but this year many will remain in the city because of the risk of spreading the coronavirus and the desire to recover lost pay. While some companies paid basic salaries during the outbreak, most workers did not have access to the bonuses they receive for good work, which can add 30% to their income.
At the same time, the manufacturing shutdown has led to shortages in sought-after polished categories.
Enough diamonds for Christmas?
Polished production has returned to between 70% and 90% of capacity as social-distancing rules have eased and demand has risen, industry insiders said. Rough supply has also increased as De Beers and Alrosa sold larger quantities at their contract sales in August and September.
But Indian cutters are still unsure whether they’ll be able to provide American retailers with the goods they need to meet resurgent consumer interest.
“In some areas there is a shortage, [and] in some areas there are enough goods and no demand,” an Indian manufacturer said on condition of anonymity, noting that 1.50- to 3-carat stones in I1 to I2 clarities were hard to source. “So it’s pretty much lopsided at this point.” US buyers might have to pay “a little extra” to secure the items they want, he added.
US clients have two approaches to this situation, according to another executive who observed shortages of 0.50- to 3-carat, F- to H-color, VS1- to SI1-clarity diamonds. A few retailers who have been selling strongly in recent months are now trying to stock up. Others have yet to acknowledge the supply situation, he explained.