Earlier, the rough diamond cutting and polishing business had moved from Antwerp to Surat in Gujarat and a few other places, due to cost considerations
For gem traders and jewellery makers over the world, Dubai remains an important trade centre for pearls. But, of late, a growing portion of trade in rough diamonds is getting shifted from the Belgian port city of Antwerp to Dubai, a constituent of the United Arab Emirates (UAE). Earlier, the rough diamond cutting and polishing business had moved from Antwerp to Surat in Gujarat and a few other places, due to cost considerations.
Business in rough, is now being squeezed out of the diamond district of Antwerp, which accommodates a World Diamond Centre and four trading exchanges, as dealers are finding it difficult to get bank funding. The big blow to dealers there, mostly Jews and Indians, came when Antwerp Diamond Bank (ADB) started the process of winding up operations globally, leaving a big gap in trade funding.
ADB used to make available around $1.5 billion to the trade. Also, toughening of banking regulations and non-governmental organisations doubting the effectiveness of the Kimberley Process Certification scheme (KPCS) in stopping all ‘blood diamonds’ finding their way into the legal market have made some other banks curb lending to the trade.
ABN Amro, which has a big exposure in the trade, and others are forcing traders to produce more cash when they bid and buy rough stones. Regulatory concerns apart, banks providing funds have growing concerns about operations of the industry, particularly relating to prices of rough diamonds, which leave inadequate margins for downstream polishing and cutting and making of jewellery.
A Mumbai-based trade official says weak retail sale outside the US and a demand outlook likely to remain weak till mid-2017 have forced mining groups, led by De Beers, to rethink pricing strategy. So, we have De Beers’ strategy head, Bruce Cleaver, announcing “the time is right for us to try and help boost confidence in the industry”.
A difficult market has changed the attitude of the world’s largest diamond miner since 2011, when it adopted a “more aggressive” pricing policy by cutting the discount between rough selling prices and the secondary cash market.
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