High export duties, soaring gold prices and the strong euro have eroded Italy's dominant position in the world gold jewellery market and threaten to dent 2006 exports, the head of Italy's goldsmiths' federation said.
Italy used to be the world's biggest manufacturer of gold jewellery but recently yielded the top spot to India, which has boosted its jewellery sector in recent years thanks to cheaper labour costs, Federorafi President Antonio Zucchi said.
"India has overtaken us as the world's biggest gold jewellery producer," Zucchi told Reuters ahead of the Vicenza gold fair, a showcase for the latest industry trends.
Output by Italian jewellers fell 15 percent to 228 tonnes in 2005, according to data provided by Federorafi and sourced from the GFMS precious metals consultancy. That compared with 539 tonnes of jewellery made in India and 198 and 197 tonnes in Italy's closest rivals, China and Turkey, respectively.
Zucchi said high import duties - varying from 5.8 percent in the United States to up to 40 percent in China and versus 2.5 percent in the European Union - had almost priced Italian producers out of their key US market and prevented them from expanding into new lucrative markets. "This causes us a lot of damage. We have almost lost the US market because of the duties and a competitiveness problem," Zucchi said.
He said Italy was still Europe's main gold jewellery manufacturer and also its top consumer, but needed equal trade conditions to regain global strength.
"We do not need favours or aid. All we want is to be able to fight with the same arms. We need equal duties, " he said.
Federorafi, which accounts for some 70 percent of gold and platinum manufacturing in Italy, said gold jewellery exports to the US market fell over 9 percent in 2005. Forecasts for 2006 were not positive because of the strong euro against dollar.
The euro has gained some 7 percent so far in 2006.
Its steady rise in recent years had made many Italian exports to the United States too expensive, while cheap goods from China and elsewhere in Asia had hit European manufacturers overseas and on their home turf.
Federorafi said two-thirds of Italian gold jewellery production went for export, with the United States accounting for 21 percent of all exports, followed by the United Arab Emirates and Switzerland with 10 percent each.
Gold prices, up more than 30 percent since the start of the year to a 26-year high of $730 per ounce last Friday, had only added to Italian jewellers' woes.
Zucchi said some goldsmiths had trimmed gold purchases and only a few had passed the higher costs on to consumers, despite eroding margins since the start of 2006.
Italy's leading jeweller Bulgari has said it would raise some product prices by 4 percent this year in response to rocketing gold prices and there may be more rises next year if gold prices remained high.