Editor’s Note
The traditional diamond market is facing significant headwinds. As this article details, a combination of shifting consumer trends in key markets like China and the rapid rise of lab-grown alternatives is challenging the long-held status and value of natural diamonds. This shift underscores a broader transformation in the luxury goods sector.
The price of diamonds, once called the ‘king of gems,’ is plummeting, leading to a loss in value. The decline in the natural diamond market is attributed to a decrease in marriages in China, the world’s second-largest diamond market, and a surge in mass production of cheaper synthetic diamonds.
According to the Hong Kong-based South China Morning Post (SCMP) on the 23rd (local time), wholesale diamond prices have fallen by about 40% over the past two years. The Zimnisky Rough Diamond Price Index has shown a steep decline since hitting an all-time high in 2022.
Paul Zimnisky, a New York-based diamond consultant and index operator, stated that diamond prices are falling as Chinese consumers hesitate to make purchases.
China’s diamond market is valued at $9 billion, making it the second largest after the United States.
Declining marriage rates and a general economic slowdown have frozen China’s diamond market. The number of marriages in China in 2024 is expected to drop to below 6.6 million, less than half the figure from 2013. The growing perception that diamonds have lost their investment value has also cooled the market.
Rajiv Biswas, an independent economist in Asia and author of ‘Asian Megatrends,’ commented on the situation.
China’s pioneering role in the mass production of synthetic diamonds is also causing the price of natural diamonds to plummet. In March, Chinese broadcaster CGTN reported that Henan Province in central China has become the ‘global production hub’ for synthetic diamonds over the past decade. Henan produces one out of every two synthetic diamonds produced worldwide.
According to Biswas, synthetic diamonds now account for 15-20% of global diamond jewelry demand, a significant increase from 1% in 2015. ResearchAndMarkets data shows the global synthetic diamond market was worth $15.3 billion in 2023 (the global diamond market size is approximately $94.2 billion).
The Secretary-General of the China Superhard Materials Association told domestic media last year that as of mid-2023, China produces about 95% of the world’s synthetic diamonds.
Chinese customers are still known to prefer natural diamonds for wedding gifts. However, even with the price drop, natural diamonds cost over 10 million won per carat. Synthetic diamonds cost less than one-tenth of that price. Therefore, SCMP reported that synthetic diamonds are preferred by low-income groups who find natural diamond prices burdensome and by the fast-fashion industry.
