Diamonds have been the darling of the luxury market for decades, with prices rising and demand outstripping supply. However, in recent times, the price of international diamonds has continued to decline, what are the reasons behind this?
The "light" is no more Natural diamond prices have fallen sharply for more than a yearAntwerp, Belgium, is known as the "Diamond Capital of Europe", there is a world-famous diamond street, there are 4 diamond exchanges on the street, thousands of diamond wholesalers gather here, and a large number of diamond transactions are completed here every year. Kevin is a diamond wholesaler from India.
Indian diamond wholesaler Kevin: The price of certified diamonds has fallen by 35 to 40 percent in the past year. Among them, diamonds between 50 and 3 carats were the hardest hit, and sales fell by 30 to 35 percent over the same period.
Data show that the International Diamond Exchange diamond price index reached a historical peak of 158 in March 2022, and then fell all the way to the current 110, a new low in nearly five years, a decline of about 30%. Industry insiders said that the continued high inflation in many countries around the world is an important reason for this phenomenon.
Frischteger, Director of the Federation of Belgian Diamond Exchanges: First of all, the price of energy in Europe is rising, and electricity is more expensive for people, so if you have too much living expenses, you will definitely say to buy diamonds later.
In addition, the price of natural diamonds has also been hit by man-made diamonds. The owner of a high-end diamond brand store told reporters that unlike in the past, more than half of the customers will choose man-made diamonds recently.
In the past year, due to the sharp rise in the cost of living and the downgrade of consumption, people in many European countries are no longer picky about the grade of diamond rings, and man-made diamonds have quickly seized the market share of natural diamonds.
Fleischteger, director of the Federation of Belgian Diamond Exchanges: Two years ago, man-made diamonds were 40% cheaper than natural diamonds, then 60% cheaper, and this year they are 70%, 80%, even 99% cheaper. Maybe in the future, you will also give you a diamond when you buy soap at the supermarket.
Global natural diamond prices have fallen by more than 13% this year"Diamonds last forever, and one lasts forever." This slogan of diamond giant De Beers has been circulating since the last century, giving diamonds a special meaning, but since this year, the price of natural diamonds has plunged, making people wonder whether the "sky-high myth" of diamonds is gradually falling.
Natural diamonds, also known as rough diamonds, refer to rough diamonds that are unprocessed or simply cut. According to the Global Natural Diamond Price Index, compiled by independent diamond analyst Kiniski, prices are down 13.6% so far this year, while retraced 24.6% from previous all-time highs.
In addition, because De Beers monopolizes the industrial chain of natural diamonds, the weak demand for natural diamonds can also be felt through its performance. In August, De Beers' seventh sales cycle this year, the company sold $370 million in natural diamonds, down 42% year-over-year and 10% month-on-month, marking the company's fourth consecutive monthly decline in sales this year.
The reason behind the plunge in diamond prices, first of all, was mentioned by De Beers' CEO, the change in the macroeconomic situation. Consumers are gradually shifting from commodity to service-based consumption, so the consumption of luxury goods, such as diamonds, has fallen sharply.
Another important factor is that a perfect alternative to natural diamonds: man-made diamonds, i.e. lab-grown diamonds, are eroding market share of natural diamonds. And its biggest advantage is that the price is much cheaper. Ankul Daga, CEO of American jewelry company Angara, said man-made diamonds sold for about 20 to 30 percent less than natural diamonds three years ago. Now, with reduced manufacturing costs and increased production efficiency, the spread between man-made diamonds and natural diamonds has widened to about 75% to 90%.
According to data compiled by Tenoris, a global jewelry industry analyst, the market share of man-made diamonds has been increasing since 2021, reaching 49.9% in July this year, which is very close to the 50% tipping point, and is expected to rise further in the future.
According to the latest report by market research firm Research And Markets, the global market value of man-made diamonds in 2022 was about US$14.5 billion, and it is expected to grow at a compound annual growth rate of about 5% between 2022 and 2030, and may reach US$21.4 billion (about 156 billion yuan) by 2030.
Over the past year, De Beers has cut the price of its mainstream product, 2 to 4 carats of natural diamonds, by 40 percent, and industry insiders say there is room for decline. In the worst-case scenario, prices will fall by another 20% to 25% or so in the coming year.
(CCTV Finance)