The Indian city of Surat, one of the world’s major diamond polishing centres, is suffering a shortage of rough diamonds.
Diamond miners are holding back supplies to sustain price levels, which have increased by 30% since March this year.
Surat is slowly recuperating from the economic slump with fresh orders coming in from countries including China but now supply is not enough.
The downturn caused Rio Tinto, BHP, De Beers and other major diamond miners to reduce rough diamond output.
De Beers decreased production of rough diamonds by 90% in the initial quarter of 2009.
Consequently, demand surpassed supply triggering volatility in rough diamond prices.