SURAT/JOHANNESBURG (Commodity Online): The other side of the recession is showing in diamond trade now. When the recession hit the big economies in 2008, almost all the diamond mining companies like De Beers cut production and several other miners did everything to reduce output so that the prices will not go down much.

Those actions have now resulted in a shortfall in diamond roughs in the market and diamond polishing nations like India are now facing a supply shortage.

This has caused the prices to soar in diamond market. Diamond manufacturers reported higher prices during the November sight period, leaving many concerned that the market is being driven by artificial forces.

Diamond Trading Company’s (DTC) prices rose an average of 5 per cent last week. The DTC’s sight No. 9 had an estimated value of $325 million, which was roughly the same as that of the No. 9 sight held in 2008, following the collapse of Wall Street. But this sight was in line with De Beers pledge that the final two sites of 2009 would be smaller. Reports from the sight indicated high premiums on boxes and strong demand for the amount of goods on the market. DTC reportedly adjusted its prices and assortments accordingly.

De Beers has started to ramp up its production again and is expected to finish the year with approximately half its 2008 total. DTC sales have proportionally decreased by an estimated 51 per cent to $2.9 billion for the year to date.

Prices for cleaner goods rose by about 5 per cent and by as much as 8 per cent for piquet goods.

Most of the manufacturers said the market is being strongly influenced by the expectation that rough will rise again in 2010.

The resumption of manufacturing in India, after it had been cancelled there for much of the first half of the year, was fueling demand. Companies have invested to resume manufacturing again and have to be aggressive in doing so.

Another factor which is driving the prices is the Christmas demand, which was very low in 2008. This year it is expected that diamond demand will go up in several countries during Christmas.

De Beers is expecting Christmas and fourth-quarter sales to at least be in line with the 2008 season, but has been hesitant to offer clear forecasts for 2010.

If information from Surat diamond polishing units is any indication, then demand fro the sparklers is all set to climb up in the coming months

Surat was one of the worst hit cities in the world following the recession which forced the diamond polishers in the city close down shops for several months due to lack of demand.

However, the new demand has brought some cheer to the market now and the Suart diamond units are now working  overtime to meet demand from China and other countries.

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