Editor’s Note
De Beers, the company that famously coined the phrase “a diamond is forever,” is making a strategic pivot. Amid falling prices for natural diamonds and rising competition from lab-grown alternatives, the mining giant has announced it will cease production of lab-grown stones for its Lightbox brand to refocus on its core natural diamond business. This move underscores the shifting dynamics and intense market pressures within the global diamond industry.
“A diamond is forever.” This was the advertising slogan invented by diamond giant De Beers, endowing diamonds with a special meaning. However, since last year, the price of natural diamonds has continued to fall, while lab-grown diamonds have gained market favor.
Affected by this, global diamond giant De Beers recently announced it will stop producing lab-grown diamonds for its Lightbox brand and will focus on the production and sales of natural diamonds in the future.
According to a report from the renowned diamond consultancy Rapaport Group, the price performance of natural diamonds in April this year was the worst since the fourth quarter of 2023. Prices across all four weight segments traded on Rapnet saw their largest declines in nearly seven months, with the price of 30-point diamonds falling by as much as 5.5% year-to-date.
The decline in diamond prices has also led to a drop in revenue for related industries.
Financial reports show that from April 2023 to December 2023, De Beers recorded year-on-year declines in both sales volume and value for seven consecutive sales cycles. As a result, its parent company, Anglo American, had to record a $1.6 billion asset impairment for De Beers in its 2023 financial report.
In April this year, the holding company miner Anglo American even considered selling its De Beers Group.
Another brand, DR Diamond Ring, which once promoted the slogan “one ring for one person in a lifetime,” also faced sluggish sales. In 2023, its parent company, Diarough, saw revenue and net profit attributable to the parent company plummet by 40.78% and 90.54% year-on-year, respectively, with non-GAAP net profit recording its first-ever loss. Hundreds of its offline stores were closed.
According to data from the Shanghai Diamond Exchange, since June 2022, the China Diamond Price Index has continued to decline from a high of around 125 points. By the end of last December, diamonds of certain weights had even fallen to around 65 points.
It is understood that the drop in diamond prices is partly due to macroeconomic influences and partly related to the development of lab-grown diamonds.
Consulting firm Bain & Company’s data shows that China’s sales of rough lab-grown diamonds reached 1.4 million carats in 2021, with a market penetration rate of 6.7%. It is estimated that by 2025, China’s sales of rough lab-grown diamonds will reach 4 million carats, with a penetration rate of 13.8%.
Furthermore, in Zhecheng County, Henan Province, China’s largest producer of lab-grown diamonds, the annual output has reached 6 billion carats of single crystals, 10 billion carats of diamond micropowder, and 6 million carats of rough and processed lab-grown diamonds. Some media predict that in 2024, Zhecheng’s annual output of lab-grown diamonds will reach 8 million carats, accounting for almost half of the global lab-grown diamond market.
According to data from a global jewelry industry analysis institution, the market share of lab-grown diamonds has been increasing since 2021. As of July 2023, the market share had reached 49.9%, very close to the 50% threshold.
Many domestic consumers have also told the media that their high-priced diamond rings experienced a “steep price drop” upon resale. A ring bought for 8,000 yuan was only worth 600 yuan for recycling, and a 30,000 yuan ring was only worth 2,000 yuan after five years. In the end, the most valuable part was the 18k gold setting.
