China market contracts
The diamond industry is no stranger to boom-and-bust cycles, but what the takeaway from the DeBeers saga is there is a significant and permanent change for the worse. The trickle of lab-grown diamonds has become a flood, rapidly squeezing out natural stones, especially in fashion jewelry and low-end engagement rings.
There has been a steady fall in the production of rough natural diamonds. The Argyle mine in Australia is depleted, and major mines in Canada are also nearing exhaustion. The ban on trade of Russian diamonds as a part of the Ukraine sanctions imposed by the West has knocked out a major source of roughs. Russia produced 37.3 million carats in 2023, or roughly 35 percent of the global production.
This has resulted in natural diamond production diving to 111.5 million carats, an 8 percent drop from 2022, and a 20 percent drop in value, the lowest level since the Kimberley Process began publishing data. Despite the lower supply, the average price of a diamond fell 14% to $114 per carat.
On the other hand, the growth of the laboratory grown diamond is robust. From market sales valued at $22.79 billion in 2023, lab-grown diamonds are expected to grow to $74.45 billion by 2032. The growth projection for Indian lab-grown diamonds is $1,192.3 million by 2033 from $299.9 million in 2023 with the corporate backing of Tata Group’s Trent and Senco Gold and Diamond. Pandora, the world’s largest fashion jewelry company, too has launched a lab-created diamond line.
Simultaneously, the industry is reeling from a collapse of the China market, which has plunged as much as 50 percent compared to the pre-pandemic levels. Demand for natural diamonds has ‘fallen off a cliff’ amid plunging marriage rates, while its factories are churning out synthetic alternatives that are up to 90 per cent cheaper, the South China Morning Post reported.
Not all newlyweds in China can afford a name-brand, natural diamond in today’s tough economy. But many no longer want one, anyway. “They don’t necessarily need something from Tiffany’s,” Vivian Wu, a 40-year-old founder of the Shanghai-based diamond business Wei An Shang Mao, was quoted as saying.
