【China】Global Diamond Prices Plunge: Is China to Blame?

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Editor’s Note

This article highlights a significant shift in consumer preferences within China, where declining interest in natural diamonds is impacting the global industry. Concurrently, the rise of China’s lab-grown diamond sector presents a new dynamic in the international market.

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China’s Changing Tastes Reshape the Market

Changes in China are rapidly reshaping global markets, according to a December 22 article by Hong Kong’s English-language newspaper, the South China Morning Post. As Chinese consumers turn away from natural diamonds, demand has “fallen off a cliff,” with the entire industry feeling the impact. Concurrently, China’s lab-grown diamond sector is rapidly developing and entering the global market. Some economists believe the years-long decline in diamond prices has led to a growing perception that diamonds have lost their investment value, a trend expected to intensify.

Price Plunge and Shifting Consumer Preferences

The article notes that natural diamond prices are falling globally. Chinese consumers are no longer splurging on natural diamonds, while much cheaper lab-grown alternatives are gaining popularity. A founder of a Shanghai diamond company stated that Tiffany jewelry is no longer a necessity for people.

“While I still complete about 10 diamond orders a week, as I have for many years, consumers now prefer cheaper options. Newlyweds tend to buy smaller diamonds to fit shrinking budgets and sometimes opt for lab-grown diamonds, which cost only one-tenth as much as natural ones.”

According to Bank of America Global Research, global diamond wholesale prices have fallen by about 40% over the past two years. Since hitting a record high in 2022, the Zimnisky Global Rough Diamond Price Index has seen a particularly sharp decline.

Diamond industry analyst Paul Zimnisky stated that changes in the Chinese market have contributed to the price drop.

“Frankly, China’s diamond demand last year can be described as having fallen off a cliff. The industry has deeply felt the impact,” he said.

Independent Asia economist Rajiv Biswas noted that China’s $9 billion diamond market is second only to the US globally, but there is a growing sense that diamonds have lost their investment value.

“In terms of investment, diamonds are no longer seen as a store of value over time because prices have been declining for years,” he said.
The Rise of Lab-Grown Diamonds

Meanwhile, analysts say China is leading the way in mass-producing lab-grown diamonds, which sell for a fraction of the cost of natural stones.

Bloomberg earlier cited the latest report from US market research firm Tenoris, which pointed out that US finished jewelry retail sales grew 9.9% in October 2024. Natural diamond jewelry saw a modest increase of 4.7%, while lab-grown diamonds achieved a staggering 46% growth. According to forecasts from the German data platform Statista, sales of lab-grown diamonds in the global jewelry market will reach about $18 billion in 2024, accounting for over 20% of the entire jewelry market.

Over the past decade, Henan Province in central China has become the “global production center” for lab-made diamonds.

An article in the Henan Business Daily in November mentioned that since China’s first successful development of synthetic diamonds in 1963, the superhard materials industry has flourished in China and gradually taken a leading position. As the cradle of the synthetic diamond industry, Henan has developed into a national R&D center and talent hub for superhard material products, and is the largest and most important diamond-producing region in China and the world.

Public data shows that China’s monocrystalline diamond output accounts for about 95% of the global total, firmly ranking first in the world, with Henan producing 80% of China’s synthetic diamonds. In the field of lab-grown diamonds, China’s production capacity accounts for about 50% of the global total, with 80% of that coming from Henan.

Zimnisky said the first lab-made diamonds began entering the global market about a decade ago, and their popularity has soared since then. He stated that synthetic products now account for 15% to 20% of global diamond jewelry demand, compared to just 1% in 2015. Data from the renowned industry intelligence agency ResearchAndMarkets shows the global synthetic diamond market reached $15.3 billion in 2023.

A Hong Kong diamond sales consultant said Chinese newlyweds still prefer natural diamonds, but lab-grown diamonds have a bright market prospect in China.

“Historically, consumers have craved fine jewelry made from rare and precious materials. In my view, the main market for man-made diamonds will include more fun, fast-fashion jewelry,” Zimnisky said.

Industry insiders point out that with the gradual recovery of the macroeconomy and the further spread of the “self-pleasure” consumption concept, downstream diamond consumption demand is expected to gradually recover. As lab-grown diamonds have the same composition and structure as natural diamonds and offer significant price advantages, coupled with education of downstream consumers by media and brands in recent years, the penetration rate of lab-grown diamonds is expected to increase further.

Earlier this year, Yu Jing, a 30-year-old architecture professional living in Shanghai, bought a pair of earrings decorated with lab-grown diamonds.

“Honestly, I don’t know if they are natural or synthetic, but these earrings only cost me 300 yuan, so I don’t mind,” she said. “My salary isn’t high, and I think lab-grown diamonds offer good value for money.”
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⏰ Published on: December 23, 2024