Editor’s Note
De Beers, the world’s leading diamond supplier, has enacted its most significant price reduction in roughly five years. This strategic move responds to a dual challenge: softening demand due to China’s economic slowdown and the expanding market for lab-grown diamonds.
The world’s largest diamond supplier, De Beers, has implemented its largest rough diamond price cut in about five years. This is a response to declining demand driven by the growth of the lab-grown diamond market and China’s economic slowdown.
According to Bloomberg News on the 15th (local time), De Beers lowered the average selling price of rough diamonds for its first sale this year by 10% across categories. The price of ‘select makeables’, rough stones between 2 and 4 carats primarily used in engagement rings, was cut by 25%. Bloomberg reported this as the largest price reduction since late 2019.
This decision aims to counter the persistent weakness in diamond demand since last year. During the COVID-19 pandemic, luxury goods prices surged as domestic and international travel halted, and diamond demand exploded. According to the International Diamond Exchange (IDEX), the diamond price index hit a record high of 158.69 (2001=100) in March 2022.
As daily life resumed, demand ebbed away like a receding tide. The growth of the relatively cheaper lab-grown diamond market further fueled the decline in diamond prices. According to London-based jewelry retailer Queensmith, lab-grown diamonds are 60-85% cheaper than mined diamonds. While a 1-carat mined diamond might trade for $10,000, a lab-grown one can be purchased for around $1,290.
The global economic situation also had an impact, with a key consumer market, China, falling into an economic slump, and the US experiencing reduced disposable income due to interest rate hikes. The diamond price index fell to 107.07 by November last year, a 32.5% drop from its peak. Last September, Alrosa PJSC, considered alongside De Beers as one of the two giants of the diamond industry, joined hands to halt all rough diamond sales for two months, but it was insufficient to stop the downward trend.
The current sale in Gaborone, Botswana’s capital, is considered particularly important in the industry as it is when intermediate buyers secure their first inventory of the new year after the holidays. De Beers sells rough diamonds ten times a year.
The industry is watching to see if this discount will become a catalyst for a diamond price rebound. Since late last year, diamond prices have begun to rebound as rough stones became scarce and demand for diamonds used in manufacturing equipment increased. Increased demand from the US year-end shopping season was also reflected. On the 16th, the diamond index rose 0.09% from the previous day to 110.29.
