Editor’s Note
The rise of lab-grown diamonds is reshaping the jewelry market, offering consumers a more affordable alternative with nearly identical properties to natural stones. While natural diamond prices face pressure, the long-term relationship between these two markets remains a subject of debate among industry experts.
‘Lab-grown’ diamonds, cultivated in laboratories, are gaining immense popularity due to their low prices and quality that is difficult to distinguish from natural diamonds for non-experts.
In contrast, the price of natural rough diamonds is experiencing a sharp decline. However, this has not yet significantly impacted the retail price of natural diamonds.
Some experts believe the lab-grown and natural diamond markets will grow separately, but others see an inevitable impact on the natural diamond market.
Consumer interest in lab-grown diamonds is surging. Lab-grown diamonds are physically, chemically, and optically 100% identical to natural diamonds, yet cost only 20-30% of natural products, driving increasing consumer demand.
Environmental pollution and unethical labor exploitation issues associated with natural diamond mining are also positively influencing the lab-grown diamond market. For consumers oriented towards eco-friendly and ethical consumption, lab-grown diamonds are emerging as a good alternative.
According to diamond research firm Edahn Golan, the sales share of lab-grown diamonds compared to natural diamonds has increased sharply from 2.4% in 2020 to 9.3% this year.
Bloomberg reported that the share of synthetic diamonds in India’s diamond exports reached 9% in June this year, a sharp increase from 1% five years ago. India is the world’s largest diamond cutting center.
Investment firm Liberum Capital Markets analyzed that, considering natural diamonds are more expensive, the share of synthetic diamonds by volume has already reached 25-35%.
As the growth of lab-grown diamonds continues, natural rough diamond prices have recently been unable to escape a downtrend.
Bloomberg reported in early September that De Beers, a global diamond industry leader, had cut the price of ‘Select Makeables’ rough diamonds—which can be processed into relatively high-value gemstones—by about 40% over the past year.
While this product category was around $1,400 per carat in July last year, it fell to around $850 per carat in July this year.
Bloomberg expects this price to fall further. De Beers sells rough diamonds to a limited group of intermediaries called ‘Sightholders’ ten times a year. Considering that prices are even lower in the secondary market between these intermediaries and jewelry manufacturers, De Beers’ supply price is likely to drop further.
Industry insiders noted that given De Beers’ history of avoiding sharp price cuts, the price drop over the past year is unusual.
Bloomberg diagnosed the rapid expansion of the synthetic diamond market as a major factor in the sharp price drop. Solitaire diamond rings of 1-2 carats are popular for engagement rings in the US. Synthetic diamonds have intensively targeted this market, which has a thick demand layer and price-sensitive buyers.
The decline in natural rough diamond prices is also confirmed in global price indices. According to CNN, the Zimnisky Global Rough Diamond Price Index fell 0.5% week-on-week and 2.2% month-on-month to 153.5 as of September 30. This index measures changes based on a baseline of 100 from December 2007. It is now down 17.38% from its 52-week high of 185.8 in early March.
He likened recent diamond price movements to a parabola, explaining that the market is now in a downward adjustment phase.
However, CNN reported that a drop in rough diamond prices does not mean consumers can buy them cheaper at retail stores. It is common for retailers not to adjust selling prices based on short-term fluctuations in rough diamond prices.
Zimnisky analysts also noted, “If wholesale prices fall in the short term, some jewelers will try to reap more profit.”