Who Still Buys Diamonds These Days?

According to statistics, since 2023, the wholesale price of polished diamonds has dropped by about 20%, and the price of uncut diamonds has decreased by approximately 35%.

In response to this, the world's largest diamond monopoly, De Beers, has declared 2023 as the "most challenging year," while several natural diamond manufacturers have opted to halt their mining activities to maintain diamond prices.

Some say it's due to the economic downturn, others attribute it to changing consumer attitudes, and there are those who blame it on war, exchange rates, and so on.

Behind these unusual changes, the widespread application of lab-grown diamonds may be the more fundamental reason. As crystals composed of pure carbon, lab-grown diamonds have no qualitative difference from natural diamonds, yet their production costs are much lower than those of mined diamonds.

In the movie "Blood Diamond," the circulation of a single diamond is tied to the loss of multiple lives.

Over a decade later, China, now the world's largest producer of lab-grown diamonds, presents a different version of the "blood diamond story," characterized by price reductions, fraudulent certification, subpar quality, and companies going out of business.

While no longer bloody and brutal, it is equally absurd and helpless.

A One-Carat Diamond is No Longer Valuable

Selling "pigeon eggs" every day is something Zhang Wei could never have imagined in the past.

"I don't sell anything below 50 points here; the mainstream is 1-carat or larger diamonds, and some families even look at 3-carat or 5-carat loose stones," Zhang Wei proudly states.

Zhang Wei is a jewelry industry professional in Shenzhen who switched to lab-grown diamonds last year.

Currently, a "top-tier" 1-carat lab-grown diamond in his possession is priced at around 4000 yuan, while one with slightly lower color and clarity is only 3000 yuan.

He refers to F color VS1/VS2 clarity diamonds as "cost-effective" grade.

In the era of natural diamond monopolies, 20,000 yuan could only buy a 0.30-carat "cost-effective" natural diamond. Now, the same amount can get you a 3-carat lab-grown diamond of the same grade.

Among Zhang Wei's colleagues, some even offer a 1-carat Def si (high clarity with minor impurities) lab-grown diamond for a fixed price of 1599 yuan.

Apart from their cost-effectiveness, lab-grown diamonds can also be customized into various shapes, including English letters or numbers with special meanings.

In Zhang Wei's opinion, "our Chinese lab-grown diamonds have completely outperformed natural diamonds."

Despite the significant advantages of lab-grown diamonds, for a long time, most of their sales were online, and their penetration rate in physical jewelry stores was not high.

Zhang Wei explains that when the technology was not mature, lab-grown diamonds were mainly used for industrial purposes. It wasn't until around 2013 that they began to appear in some consumer markets around the world. Moreover, due to the slim profit margins of lab-grown diamonds, most jewelry businesses were in a wait-and-see state, and the willingness to introduce lab-grown diamond jewelry was weak.

In recent years, the tide has begun to change.

Wang Fang, a sales associate at a Shanghai gold jewelry brand, reveals that in the past, the markup on diamonds was high, and the commission from selling a diamond ring far exceeded that from selling gold. Therefore, they used to strongly recommend diamonds to couples planning to get married.

This year, she has noticed a sharp decline in customers coming in to buy diamonds. "Even those with some inclination would ask if we have lab-grown diamonds available," she says. Due to the sluggish diamond sales, she and her colleagues now prefer to recommend gold with lower commissions rather than continue to promote diamonds.

The sales data from major natural diamond brands also speak volumes.

De Beers achieved a revenue of 1.242 billion yuan in the first half of the year, a year-on-year decrease of 40.45%; DIAMTECH saw its first-half revenue at 430 million yuan, down 21.4% year-on-year, and BRILLIANCE recorded a first-half revenue of 141 million yuan, a year-on-year decrease of 12.57%.

De Beers Co., Ltd.'s Announcement Regarding the Reply to the Inquiry Letter from the Shenzhen Stock Exchange's Growth Enterprise Board

De Beers, the creator of the slogan "A diamond is forever," had already begun to lay out lab-grown diamonds as early as 2018. Its lab-grown diamond brand "Lightbox" does not distinguish between grades but only between "best" and "average" quality, priced at $1500 and $800 per carat respectively.

In fact, by 2022, over 70% of consumers in the United States had chosen lab-grown diamonds, causing the natural diamond dealers to struggle.

On November 14th this year, De Beers announced that it would gradually transition to lab-grown diamonds, predicting that by 2030, 50% of its sales would come from lab-grown diamonds.

As for the impact of lab-grown diamonds on the natural diamond market, opinions are divided.

Some believe that the decline in the price of natural diamonds will eventually stop, while others argue that the two will coexist and that the market for lab-grown diamonds will only continue to expand.

The jewelry industry is facing a major transformation. The once-ruling natural diamonds are now being challenged by lab-grown diamonds, which offer not only a more cost-effective option but also a more environmentally friendly alternative.

The era of lab-grown diamonds is dawning, and it's changing the landscape of the diamond industry as we know it.