Editor’s Note
This article examines recent price trends in the natural diamond market, highlighting specific declines in certain lower-grade categories as reported by PriceScope and RapNet in early to mid-2025.
Before we dig into causes, it helps to see where the market stands in 2025:
According to PriceScope’s February 2025 report, certain lower grade natural diamonds such as J SI1 or K SI2 categories have seen sharp declines. For example, a J SI1 dropped from about USD 2,641 in January to USD 2,357 in February.
The RapNet Diamond Index reports that in June 2025, actual sale prices for one carat natural diamonds fell by 0.3 percent, while 0.5 carat stones saw larger drops of 2.3 percent.
The IDEX list price index showed a steep increase in asking prices of 4.83 percent in one period, illustrating the gulf between what sellers hope to get and what buyers are willing to pay.
On the rough diamond side, the Zimnisky Global Rough Diamond Price Index shows rough diamond prices down one to two percent year to date by mid 2025, following declines of 18 percent in 2024 and 15 percent in 2023.
Analysts report that rough mined diamond prices have dropped roughly 34 percent from their peak in 2022 to late 2024.
Media coverage notes that natural diamond prices in retail shops have declined about 26 percent compared to two years prior.
These data points confirm a broad weakening not just in one niche, but across many sizes and grades. Now let us turn to why this is happening.
1. Competition from Lab Grown Diamonds
One of the most disruptive forces at work is the competition from lab grown diamonds. These stones are chemically, optically, and physically equivalent to mined diamonds, yet they can be produced more predictably and often at a much lower cost per carat. As lab grown technology improves and scales, their prices have fallen steeply, which has in turn undercut demand for natural diamonds, particularly in the lower and mid quality ranges where substitution is strongest.
Buyers who might once have purchased a modest natural diamond are increasingly choosing lab grown alternatives that offer similar appearance at a fraction of the cost. Because of this substitution, retailers and wholesalers are forced to lower natural diamond prices to stay competitive. The more that lab grown stones encroach into mainstream jewelry segments, the more squeezed the natural segment becomes.
2. Overhangs in Supply, Inventory, and Unsold Stock
Mining companies and diamond houses have accumulated significant inventories of natural diamonds that they are struggling to sell. De Beers, a major player in the sector, reportedly held billions of dollars of unsold diamond inventory in 2025.
When supply outpaces demand and inventories accumulate, sellers are forced to discount to move stock. This dynamic creates a vicious cycle. Discounts reduce perceived value, which reduces buyer willingness to pay, which further depresses prices.
Also, some producers have maintained higher rough inventory levels relative to demand expectations, which fuels further downward pressure.
3. Weak Consumer Demand, Especially in Key Markets
Natural diamonds are often purchased as luxury goods for engagement rings, fashion jewelry, and heirlooms. These demand segments are sensitive to economic conditions, consumer confidence, and changing priorities.
In 2025, demand in key markets such as the United States, China, and even Western Europe is showing signs of softness. Inflation, high interest rates, and uncertain macroeconomic outlooks have made luxury spending more cautious. Some buyers are postponing big purchases or opting for less expensive alternatives. This softness affects especially the mid tier goods, pulling down prices.
Further, demographic changes and evolving values among younger buyers play a role. Millennials and Gen Z consumers often prize ethical, sustainable, and cost efficient options. Many of them see less value in paying heavy premiums for natural diamonds when alternatives exist.
4. Declines in Mining Output and Rough Diamond Cuts
Paradoxically, lower supply alone cannot rescue natural diamond prices when demand is soft. In 2025, many major producers have cut back rough output projections in part because of falling prices and lower profitability in extraction.
But cuts in supply are often too late and too modest to offset the magnitude of demand weakness and the substitution effect. While supply contraction can help stabilize prices if demand is steady, in 2025 demand is not steady, and so the price slide continues.
Additionally, global rough diamond production in 2025 is expected to fall to around 105 million carats, one of the lowest levels since the mid 1990s. Although lower production might reduce pressure in the long term, the immediate effect is limited unless matched by robust demand.
5. The Premium Gap and Perceived Value Deterioration
Natural diamonds have historically commanded large premiums for the natural origin, branding, perceived rarity, and prestige. But as lab grown alternatives become more acceptable in aesthetics, many buyers question whether the premium of a natural stone is justified.