Traders in ruby-rich Mogok, Mandalay Region, have traditionally relied on custom from Chinese buyers, but over the past year businesses has become slower and slower, leading many miners to pack up and move to the quartz mines in Tanai township, Kachin State.
The lacklustre market looks likely to continue at least until early next year, traders told The Myanmar Times.
“With the election and the slowdown in China’s economy, business is tough,” said Daw Hla Kyi, a jewel trader in Mogok’s gems market, Yote Shin Hta Pwae.
“We have managed to make a profit, but sales are slow. Perhaps they will improve during the Chinese New Year.”
Every year demand for rubies rises during China’s major holiday, when gifts are traditionally given. However, U Thant Naung, a Mandalay-based jade and rubies merchant, said the slowdown in Chinese demand is likely to be structural.
While Mogok traders are forbidden by law from selling gems to foreigners, Chinese merchants have been coming to buy rubies through Myanmar proxies for many years.
“In the past, Chinese banks extended loans, not only to ruby merchants but to jade merchants and buyers of other precious stones,” said U Thant Naung.
“But now the government is controlling loan growth as the economy slows.”
Growth in China has slowed from more than 10 percent in 2010 to an expected 6.5pc in 2016.
The average non-performing loan ratio at its commercial lenders had risen to 1.59pc by the end of the third quarter this year, according to the China Banking Regulatory Commission, and is likely to rise further.
With few willing buyers, production in Mogok’s mines has also fallen since last year, said resident Ko Thein Win, who returned to the area to vote in the November 8 election.
Many workers have now moved on, he said. “Since 2014, most Mogok people have left to work in Tanai. They are experienced miners and can earn good money.”
“Gem production in Mogok is down, and business is slow because fewer Chinese traders are buying. Investors are not keen, because costs are high and production is uncertain,” he said.
Ruby and sapphire production in Mogok is mostly in the hands of big private companies that work closely with the government.
Deposits of rubies in Mogok are reportedly thinning, and the number of high quality stones, once abundant, is said to be declining.
Nevertheless, ruby traders remain. Most of Mogok’s residents are dependent on the industry.
Many are ethnic Lisu and Kachin, deftly handling hundreds of thousands of dollars’ worth of raw and polished gemstones for sale overseas or across the country.
Freelance jewellers work the raw gems brought from mining firms in Mogok and Kyat Pyin city, smoothing and shaping them.
Though they charge only K300-K500 a carat, the polished stones can sell for much more than the rough ones, said Daw Hla Kyi.
There are two gem markets in the town, Yote Shin Hta Pwae, which opens in the morning, and Pan Chan Hta Pwae, which opens after 1pm.
“People pay the highest prices for high-quality red rubies and red sapphires. Most of the best gems are bought by foreign traders,” said trader Ma Khin Win.
“We appreciate the fact that they tend not to bargain much. But now that they don’t come any more, our life is a little austere.”
For Ko Thein Win, “If the Chinese come back, so will the Mogok gem trading market.”
Source: Myanmar Times