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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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