Global demand drop drags down prices
- By: VALISA KRAIRIKSH
- Published: 18/02/2009 at 12:00 AM
- Newspaper section: Business
Thailand's diamond and gemstone trade is in deep trouble with a fall of 20-30% in projected demand this year, similar to the global demand slide, said Chirakitti Tang, president of the Thai Diamond Manufacturers Association. Last year, Thailand exported 36 billion baht worth of diamonds alone. The biggest drops in demand have been in the US market, with a 20% decline in demand, followed by Europe, with a 15% drop.
Asian markets are more resilient, with consumers in Japan consuming 10% fewer diamonds, while only India and China may experience increases in demand. The international diamond trade last year was worth around US$20 billion.
''The [international] market is set to shrink 40-50% as demand decreases and prices plummet. As the industry suffers, banks are calling back loans. This means that jewellers are forced to cut product prices, dragging market prices downhill,'' he said.
''Before September, when the world economy started to crash, the price of diamonds had risen 17%.''
The slowdown could translate to 20% of the highly trained diamond-cutting personnel in Thailand losing their jobs this year.
''There is a high investment in training qualified personnel. Real diamonds have to be used in their schooling, and this costs many hundreds of thousands. Once they have to find new jobs, they are not likely to return to the industry,'' said Mr Chirakitti.
As for the market for coloured gemstones from Thailand, such as rubies and sapphires, the situation has been deteriorating for the past nine years, as the value of goods exported has been declining despite rising export volume.
''Prices are already so low that it's unlikely they will get any lower,'' said Mr Chirakitti.
In 1999, Thai researchers invented a new way of heating gemstones to produce colour. Not all gemstone suppliers disclosed their products were unnaturally coloured, leading to a loss in confidence in Thai gemstone suppliers.
''Over the past six years, 80% of the factories in Chanthaburi have closed down,'' Mr Chirakitti said of the province that is a regional hub for coloured stones.
''The government only wants to look at good news, which is why they only look at the amount of jewellery exports,'' he added.
''If we are going to maintain our 30-year reputation for quality gemstones, the government needs to work with the private sector to correct the perception that Thai gemstones are inferior.
''For those in the industry, we need to ensure that we are transparent about our products. There is nothing wrong with stones that have been coloured. We just need to be open about the process.''
http://www.bangkokpost.com/business/economics/11842/industry-in-rut-as-diamonds-lose-lustre
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