demand and supply analysis in diamonds

7/31/2019 Demand and Supply Analysis in Diamonds

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DEMANDANDSUPPLYANALYSISINDIAMONDS

By:

Bharti verma - MBA/4544/11

( March, 2012)


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INTRODUCTION TO DIAMONDINDUSTRY

The Indian diamond cutting centers are concentrated inBombay and Surat, a small town about five hours away fromBombay.

The Indian diamond trade generates over 4 billion dollars inexports every year -- this represents an almost 25 percentvalue addition to the imports of roughs.

Retail diamond prices in the second half of 2008 experienced

one of the largest decreases in decades and followed byrelatively no price changes up or down in 2009. However,rough diamond prices in 2009 were up by about 15% andthey have increased that much already in 2010. As a result,there is significant pressure on polished diamond prices tomove upward.


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At the end of January 2010, there was anindustry wide price increase for diamonds over3.0 carat weight with price increases ranging

from 1.5% to 3.5% depending on carat weight,color and clarity.

In mid-February, another industry wide priceincrease occurred for round diamonds in the1.00 to 1.99 carat range with at least H colorand VS2 clarity and had increases in the 1.0%to 5.0% range depending on carat weight,

color, and clarity.


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DEMAND AND SUPPLY ANALYSIS

Worldwide rough diamond demand is expected togrow at an average annual rate of 6.6%, to nearly$23 billion by 2020, while rough diamond supply isestimated to grow at a compound annual growthrate (CAGR) of 2.8% in carat terms and 3% involume in the same time period.

In China and India, demand is fueled by two relatedtrends--growing urbanization and the rise of themiddle class, Bain said. As the middle classcontinues to expand in both countries, the retaillandscape will adapt by adding physical and onlineretail stores that require inventory.


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Worldwide, rough diamond demand should grow atan annual average rate of 6.6% to nearly $23 billionby 2020. Starting in 2013, demand will likely return

to its pre-crisis trajectory.


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the U.S. is still the biggest diamond consumer, butmost new growth worldwide comes from China,

India and the Persian Gulf.


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Not only are India and China expected to consumemore diamonds, they've increased their share inmanufacturing. Roughly 80% of the world's

manufacturers are based in the 2 countries.


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THESECHARTSSHOWPROJECTEDSUPPLYANDDEMANDSIDE-BY-SIDE. HISTORICALLY, SUCHAN

IMBALANCEINDICATESFIRMPRICESFORTHEDIAMONDINDUSTRY :


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THEREARE, HOWEVER, ANUMBEROFRISKSTHATCOULDPOTENTIALLYDISRUPTTHESUPPLY-DEMANDBALANCEOVERTHENEXTDECADELIKE

:- A severe double-dip recession, fallout from the European

debt crisis and downturn in the U.S. could slow demandfor diamonds beyond Bain's projections.

While no diamond investment funds have really takenoff, if one does in the next decade, it could significantlydrive up the demand for diamonds.

Synthetic diamonds are not currently competitive withnatural diamonds, but if they become cheaper andperception of them improves, the market could benegatively affected.


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QUESTIONAIRE

NAME-

AGE-

GENDER- OCCUPATION-

INCOME GROUP(Annualy):-

Rs 400000 Rs 500000

Rs 500000 Rs 700000

Rs 700000 Rs 100000

Rs 100000 Rs 1300000Rs 1300000 Rs 1500000

Rs 1500000 and above

TREND OF BUYING DIAMOND JEWELLERY IN PAST YEARS IN RUPEES (Approx.):-

2007

2008

2009

2010

2011

Thank you for your precious time.


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DATA COLLECTED BY QUESTIONNAIRE

Total income spent on diamond jewel are:-2007 Rs. 4240002008 - Rs. 4440002009 - Rs. 4870002010 - Rs. 523000

2011 - Rs. 570000

Average income:-2007- Rs. 42400

2008 - Rs. 444002009 - Rs. 487002010 - Rs. 523002011 - Rs. 57000


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CONT

AVERAGE OF EXPENDITURE SPENT ONDIAMONDS BY DIFFERENT INCOME GROUPS :

4-5 L - AVERAGE 150000 (3 PEOPLE)5-7 L - AVERAGE 247000 (5 PEOPLE)

7-10L - AVERAGE 299000 (1 PERSON)

10-13L - AVERAGE 433000 (1 PERSON )


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DATA COLLECTED FROM INTERNET

PRICE OF DIAMOND IN PAST YRS

2007 0.3 carat @ Rs. 11600

2008 0.3 carat @ Rs. 129002009 0.3 carat @ Rs. 14700

2010 0.3 carat @ Rs. 15900

2011 0.3 carat @ Rs. 16400


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ANALYSIS OF DATA COLLECTED THROUGH

QUESTIONNAIRES :-

PRICE EFFECT OF DIAMOND ON BUYINGBEHAVIOUR OF DIAMOND

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

42400 44400 48700 52300 57000

price per 0.3 carat

price per 0.3 carat


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INCOME EFFECT ON BUYING TREND OFDIAMOND :

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

4 lac - 5 lac 5 lac - 7 lac 7 lac - 10lac

10 lac - 13lac

Column2

Column1

avg. diamond purchase value


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demand and supply analysis in diamonds

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