Volatility in the Diamond Industry

Today's natural diamond industry is now dealing with a significant lull in sales. Contrast this with the uncanny surge in sales during the covid era pandemic during the 2021 and 2022 seasons. This was likely due to the heightened pandemic-era demands which declined after a return to normalcy.  The decline of diamond sales and the subsequent drop in trading price appears to be a natural correction following the unprecedented upswing.

White Diamonds Prices Slump

Trading discounts for white diamonds in particular have been noticeable.  For example, natural white diamond prices have witnessed a notable slump.  For example, the prices have declined a whopping 10.7% according to  ABC News in 2023.  A noticeable fall from 2022 and a staggering 21.3 percent fall was recorded from January 1 to November 1.  Over the last two years, prices for 1-carat diamonds have dropped a noticeable 32 percent.  A variety of factors have led to this decline.  One jarring example has been the central bank interest rate hikes aiming to curb inflation. This plays a substantial contribution to the decline in diamond prices.  Typically diamond prices have had a strong correlation with GDP growth, and have reacted to these economic shifts.

Lab Grown Diamonds are the Culprit

With the emergence and increasing popularity of lab-grown diamonds, the natural diamond market has been under increased pressure. In 2018 the leading natural diamond manufacturer in the world, De Beers, became a pioneer in the lab-grown diamond industry. A major factor for the shift in popularity is the large difference in price between natural and lab-grown.  According to ABC News, the substantial price difference between natural and lab-grown diamonds has led to a split in consumer preferences, favoring the more affordable lab-grown diamond.

Natural Color Diamonds a Niche Market

 

Despite white natural diamonds facing challenges, there is still a strong market for natural color diamonds, especially pink diamonds procured from Rio Tinto’s Argyle diamond mine. For example, the industry reports that these very rare and prized pink diamonds continue to outperform during the white natural diamond market slump.  Furthermore, these pink diamonds are significantly higher in price than any other diamond.

Scarcity and Outlook

Many natural diamond dealers and market insiders still believe that the element of rarity inherent in natural diamonds will eventually become balanced.  The hope is that lab grown diamonds do not maintain any value.  Therefore, after a market cool-down, many anticipate a rebound in prices compared to their lab-grown diamond counterparts. With that said, there are still concerns that arise about the shrinking amount of global rough diamond mining.  This suggests that a potential scarcity might actually boost natural diamond values in the future. Additionally, because of the change in how supply chains operate, many suggest a complete halt in the flow of the natural diamonds market may help contribute to stabilizing natural diamond prices.  During these uncertain times, many in the diamond industry are questioning what is value.

Jewelry and Diamond Industry Remarks

Updates The US market is doing okay, with good demand for select sizes and qualities of diamonds. Prices for better-quality round diamonds, the 0.50 to 1 ct., F-I, VS2 to SI2+ goods are stabilizing, with shortages of oversizes. RAPI for 1 ct. +0.8% in Nov., 0.50 ct. +1.2%. Overall market may be starting to bottom out due to reduced supply, but there is a danger of future oversupply as India ends its voluntary ban on rough imports on Dec. 15.

• The European Union is likely to ban Russian diamonds as part of the G7 sanctions. This could affect the supply and demand of diamonds in the region, as well as the political and economic relations between the EU and Russia.

• The Israeli market is facing challenges due to the ongoing war, but the industry has found logistical solutions to cope with the situation. Exporters are watching the US holiday season carefully and are satisfied with sales so far. American goods are becoming harder to replace.

• The Indian market is seeing a rise in sentiment as domestic and overseas orders increase. US holiday sales are supporting the trade. Prices in Mumbai are higher than in other trading centers such as Hong Kong. Steady improvement across all diamond categories, with nice SIs selling to the American market. Indian jewelry demand is boosting the small-stone segment. Industry is approaching the end of the rough-import freeze with caution, aiming to avoid oversupply as buying resumes.

• The Hong Kong market is improving ahead of the holidays and the Chinese New Year. Strong consumer attendance at the Hong Kong Jewelry Manufacturers’ Association (JMA) show, but focus was on lower price points. Shoppers across the region are shifting to less-expensive items amid ongoing economic weakness. Synthetics are making inroads but are proving less popular in mainland China due to the focus on long-term value.

 

[caption id="attachment_2660" align="aligncenter" width="300"]Lab Grown Diamonds Lab Grown Diamonds are becoming increasingly popular. Natural Diamond Market[/caption]

 

 

 

https://jewelleryworld.net.au/news/diamond-prices-experience-steep-decline-amid-market-corrections/

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