Can a Lab-Created Diamond Be ‘Forever’?

Demand for lab-created diamonds continues to show an upward trend, but it is this very demand that clouds the reality.

The diamond industry, still divided, is immersed in a fluctuation that has caused an unexpected shift between two types of precious stones that continue to seek to establish themselves as different, though both valid. Luxury and safe-haven value play an important role in this market change that precedes what could be the future of this industry.

Demand for lab-created diamonds continues with a clear upward trend while rough diamonds are experiencing precisely the opposite, as an increasing number of Americans, in this case, are choosing engagement rings made from lab-created diamonds. (It is worth remembering that this type of diamond began to reap its success precisely in the United States and gradually conquered other territories, including the Spanish market). Engagement rings with natural diamonds of one or two carats, i.e., with a not-so-high cost, have also experienced quite sharp price drops in the United States. According to experts, the reason is due to increased demand for lab-created diamonds from price-sensitive consumers. Furthermore, another key data point lies in India’s diamond exports, where around 90% of the world’s supply is cut and polished. In this case, lab-created diamonds accounted for about 9% of the country’s diamond exports in June, compared to about 1% five years ago, and given the cost at which they are sold, that means between 25% and 35% of the volume is now lab-grown, according to Liberum Capital Markets. At the same time, Anglo American Plc’s unit’s first-half profits plummeted more than 60% to just $347 million, with its average selling price falling from $213 per carat to $163 per carat. Its August sale was the smallest of the year so far. Additionally, according to Statista, lab-grown diamonds are gaining an increasing share of the global diamond market each year, and the market share is expected to reach 10% by 2030.

This situation is causing a collapse, and the question of whether the demand for natural diamonds will undergo a permanent change or if we are merely facing a passing moment is up in the air. In response, De Beers, which has enjoyed a monopoly since 1888 but has recorded a 38% year-on-year decline in the value of rough sales, as communicated through an official statement, insisted that the current weakness is a natural downturn in demand following a consumer who, trapped at home by a health crisis, seeks a more economical option. The company admits that, therefore, there has been some penetration in the synthetic stone category, but does not see it as a structural change.

Recently, De Beers announced that after being immersed in a pilot project with Lightbox, its own brand that works with lab-grown diamonds, it decided to stop working with this type of diamond in its engagement ring collection due to, as reported, “the lack of business prospects” and because “the commercial proposition for many lab-created diamond engagement ring offerings is unsustainable. Retailers already need to double the number of carats of synthetic diamonds sold every two years to maintain a fixed absolute gross profit.” At the same time, they announced the launch of their new Christmas campaign and, as Sara Benavente, a graduate in gemology and appraisal and an expert in diamond and colored gem grading, tells us:

This investment is due to De Beers’ desire to support consumer demand for natural stones.

On the other hand, Pandora, the world’s largest jewelry retailer by items sold, raised its full-year forecasts, stating it would expand further in its fastest-growing segment: lab-grown diamonds.