Surat : As the natural diamond industry faces a significant challenge from the lab-grown diamond, there is more bad news for the diamantaires. For the first time, the lab-grown rough diamond prices have increased between 13-15% due to the increasing popularity of lab-grown diamond jewellery in the western countries. The diamond growers in China have grabbed the opportunity to hike the prices of rough diamonds riding on the boom in the market.
On the contrary, the prices of natural rough diamonds decreased by almost 15% in December 2024. According to the report in IDEX Online, De Beers is reportedly sitting on its largest stockpile of diamonds since the 2008 financial crisis.The company now holds an estimated $2 billion worth of diamonds. This accumulation is attributed to weak demand, particularly in China, and rising competition from lab-grown diamonds.
Babu Vaghani, president of the Lab-grown diamond association in Surat said, “More than 50% of the natural diamond cutting and polishing units are now processing lab-grown diamonds. During the ongoing recession in natural diamond segment, lab-grown diamonds are sustaining most of the small units in Surat”
“As the demand for lab-grown diamonds have increased globally, Chinese manufacturers have increased the rough diamond prices by almost 13-15%” added Vaghani.
In the third quarter of this year, De Beers reported revenues of just $213 million – a sharp decline compared to $899 million in the same period of 2023. First-half revenues also fell, dropping to $2.2 billion from $2.8 billion year-on-year, according to the report.
As LGDs become increasingly popular because of their perceived ethical and environmental advantages, lower price, and physical and visual similarities to natural diamonds, the industry has seen consumer demand shift toward synthetic stones, which has contributed to the price decline of natural diamonds. This is likely the biggest challenge facing diamond producers today, as per the report published by Mckinsey & Company.
The report further highlights that LGDs were originally developed for use in several industrial applications, such as drill heads and cutting and polishing equipment, as non-gemstone-quality substitutes. Since then, LGDs have grown into consumer jewelry markets, where technological advances continue to make inroads across quality and stone size (currently at around three carats).
Some branded jewelers are investing in lab-grown inventories, while other large jewelry companies are phasing out natural diamonds. At the same time, some leading producers of LGDs have secured funding from investment firms.
By contrast, other natural stone producers are reluctant to see the value of LGDs as a cheaper alternative to natural diamonds, for fear of cannibalizing their own markets. LGDs sold at a 20 percent discount compared with natural counterparts in 2018, whereas prices today are at an 80 percent discount, partly because of industry efforts to delineate the value and application of non-bridal stones.
Nevertheless, as the quality and availability of LGDs continue to improve, costs are expected to decline. Furthermore, as a potentially ESG-friendly alternative to natural stones and with the option to purchase large stones for low prices, LGDs could be increasingly attractive for younger buyers in Western countries, whereas buyers in China lean toward natural stones. The Knot, a global marketplace for wedding vendors, reported that 46 percent of engagement stones in 2023 were synthetic diamonds, compared with 12 percent in 2019, the report stated.
