【韩国】Diamonds in Crisis… Plummeting 30% from 2022 Peak

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Editor’s Note

This article examines the dual pressures facing the natural diamond industry: a significant demand slowdown in a key market and the growing competitive challenge from lab-grown alternatives. The analysis suggests a period of continued price adjustment may lie ahead.

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Impact of Reduced Demand in China and Emergence of Synthetic Diamonds
“Could Fall an Additional 15-20% Over the Next Year”

“Diamonds are forever.” On the 4th (local time), the US economic media CNBC reported that this slogan of De Beers, the world’s largest diamond supplier, may no longer be valid. The diagnosis is that the diamond industry is in trouble due to continued weak demand in China and the growth of the substitute market.
According to the report, the British multinational mining company Anglo American announced last month its plan to spin off or sell its subsidiary De Beers. Duncan Wanblad, CEO of Anglo American, also recently reaffirmed the intention to sell De Beers in an interview with major foreign media, stating,

“(This divestment decision) will be the most difficult part of the radical restructuring that De Beers must undertake.”

CNBC analyzed that this divestment decision is not unrelated to the slump in the diamond market. Paul Zimnisky, a diamond specialist analyst, explained,

“Despite the powerful legacy De Beers left in the Anglo American era, diamonds are no longer a suitable business. It seems the company ultimately wants to focus on a long-term vision, like its shareholders desire, concentrating on raw material strategies for building green infrastructure, such as copper.”

The diamond market has recently entered a downturn. According to the ‘Zimnisky Rough Diamond Index,’ diamond prices have fallen 5.7% so far this year. They have dropped more than 30% from the all-time high in 2022.
One reason for this slump is cited as the decline in diamond demand in China, which was the world’s second-largest diamond market for the past decade. Market research firm Daxue Consulting analyzed,

“Along with the decline in marriage rates in China, the popularity of gold and lab-grown gems has led to a decrease in diamond demand.”

The end of China’s COVID-19 lockdown measures also had an impact, as consumers increased travel-related spending instead of purchasing diamond products.
The emergence of synthetic diamonds (lab-grown diamonds), which can be produced at up to 85% lower cost than natural diamonds, has also fueled the decline in natural diamond prices. Ankur Daga, CEO of the high-end jewelry retailer Angara, predicted,

“The core of the problem is the rapid growth of synthetic diamonds. In the US, the largest consumer of diamonds, about 50% of engagement ring stones will be produced in laboratories going forward, and natural diamond prices will fall an additional 15-20% over the next year.”

According to data provided by analyst Zimnisky, sales of synthetic diamonds, which accounted for only 2% of the global diamond jewelry market in 2017, surged to 18.4% in 2023.
However, there is also optimism. The explanation is that since there has been no large-scale marketing for diamond sales until now, aggressive marketing could reverse the market situation. Recently, Signet Jewelers, the world’s largest jewelry retailer, announced a marketing partnership plan with De Beers to boost diamond demand. Signet expects its sales contract to increase by 25% over the next three years.
Anish Aggarwal, co-founder of Gemdax, a diamond specialist advisory firm, emphasized,

“The diamond industry hasn’t done large-scale marketing for almost 20 years, and we are witnessing the aftermath,”

while also stressing the need for marketing that can reignite demand from Chinese consumers.

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⏰ Published on: June 05, 2024