Diamond industry 'in trouble' as lab-grown gemstones tank prices further (2024)

“A diamond is forever,” but perhaps not for the increasing number of consumers spurning the gemstone for lab-grown counterparts, gold and even other colored gemstones.

The slogan was coined bydiamond giant De Beersin1948, capturing the impression of security and romance. But not all relationships withstand the test of time.

The company’s largest shareholderAnglo Americanplans to divest De Beersas it restructures its business after rejecting a takeover bid fromBHP. Anglo American CEO Duncan Wanblad told theFinancial Timesthat selling De Beers will be “the hardest part” of the company’s radical restructuring.

“Diamonds don’t really fit in anymore despite the strong legacy of De Beers under Anglo,” said independent diamond industry analyst Paul Zimnisky.

“Anglo is ultimately going to do what its shareholders want, and it seems they want to focus on a longer-term strategy of commodities that support the green infrastructure buildout, for example copper,” he told CNBC.

Dwindling diamond demand

The demand for diamonds has declined as its allure fades in a key consumer market: China.

Falling marriage rates as well as growing popularity for gold and lab-grown gems all drove down Chinese demand for diamonds, saidmarket research firm Daxue Consulting. The end of pandemic restrictions also saw consumers channeling their spending toward travel experiences instead of diamond products.

Diamond prices have fallen 5.7% so far this year, according toZimnisky’s rough diamond index, declining more than 30% from their all-time high in 2022.

De Beers once commanded amonopoly on the diamond market, but its share has fallen. Economic conditions led the company to cutting prices by 10% at the start of the year,Bloombergreported citing sources.

“Last year was a much tougher period for the [diamond] industry as economic challenges, a post-Covid lull in engagements and a growth in supply of lab-grown diamonds all affected demand conditions,” Anglo American’s head of communications, Marcelo Esquivel, told CNBC.

The preference for lab-grown diamonds also plays a critical role in driving down prices of natural diamonds, saidAnkur Daga, founder and CEO of fine jewelry e-commerce company Angara.

“The core issue is the rapid growth of lab-grown diamonds,” he said. Daga added that in the U.S., which is the largest consumer of diamonds, half of engagement ring stones will be lab grown this year, up from just 2% in 2018.

Lab-grown diamonds, whichcan be up to 85% cheaperthan natural diamonds, are made in a controlled environment using extreme pressure and heat. The process recreates how natural diamonds are forged deep in the Earth’s mantle. Lab-grown diamond sales surged from just 2% of the global diamond jewelry market in 2017 to 18.4% in 2023, according to data provided by Zimnisky.

Additionally, the case for buying diamonds as an investment has dwindled, Daga said. Diamonds were seen as an asset and inflation hedge over the last 50 years, he elaborated. But that investment rationale has largely faded as prices plunge.

An industry ‘in trouble’

“The diamond industry is in trouble,” Daga told CNBC, adding that he believes natural diamond prices could fall another 15%-20% over the next 12 months.

Some are a bit more hopeful.

“There’s no doubt that there are some challenges in the diamond industry, but they’re not challenges that can’t be addressed,” said Anish Aggarwal, co-founder of specialist diamond advisory firm Gemdax.

He noted diamonds are discretionary products and it’s a case of “creating the want” for it, as with the case for other luxury segments like high-end watches and bags.

“The industry has not done large-scale category marketing for almost 20 years. And we’re seeing the aftermath of that,” Aggarwal said, adding that the diamond industry will need to work hard to reignite Chinese consumer demand.

This requires a cohesive marketing approach, Aggarwal added. Similarly, Zimnisky echoed that meaningful industry marketing could just turn the diamond market on its head.

Just recently,the world’s largest jewelry retailer, Signet Jewelers, announced a marketing collaboration with De Beersto propel demand for natural diamonds. Signet is expecting a 25% upswing in engagements over the next three years.

Anglo American’s Esquivel also notes that higher engagements and climbing disposable incomes would help alleviate challenges in the market.

“It’s the largest diamond miner in the world and the largest diamond retailer in the world working together, so it’s significant and could really move the needle for the larger industry,” said Zimnisky.

Lee Ying Shan, CNBC

Lee Ying Shan is a news associate with CNBC International based in Singapore.

Diamond industry 'in trouble' as lab-grown gemstones tank prices further (2024)


Is the price of lab diamonds going down? ›

Are lab grown diamonds falling in price? Yes, lab grown diamond prices have been declining for years and currently cost about 84% less than natural diamonds. Over the past year, lab grown diamonds have fallen -27.96% while natural diamonds have fallen -9.61%.

Will lab-grown diamonds devalue real diamonds? ›

As with a natural diamond you can expect your lab grown diamonds to significantly drop in monetary value after purchase. Some estimate that lab grown diamonds can drop to 10% of their original price or lower, while more generous estimators put them nearer to natural diamonds at 30% of the original price.

Why are lab diamonds a poor investment? ›

They have NO resale value.

Unlike natural diamonds which holds value over time, laboratory-grown diamonds are industrial products that are factory produced in matters of weeks. Since they are not rare and easily mass produced, there is NO secondary market for them.

What is the issue with lab-grown diamonds? ›

Lab-grown diamonds require a tremendous amount of energy to create. They are mostly produced in factories by machines that require constant power. While there is a substantial range of energy usage between different factories, there is nothing that suggests that man-made diamonds are an environmentally friendly choice.

Will lab diamond prices go down in 2024? ›

Lab-Grown Diamond Prices to Drop in 2024 as Market Reinvents Itself - Gemworld International.

Are lab created diamonds overpriced? ›

Lab diamonds cost a lot less than natural diamonds - typically a lab diamond will cost between 60% and 85% less than a natural diamond with identical carat weight and grades.

Is there any reason not to buy a lab diamond? ›

Purchasing a diamond (natural or lab grown) is like buying a new car and driving it off the lot, meaning 90% of the time you will not be able to resell it for more than you paid! There is really no comparison in the environmental impact of lab diamonds vs. a brand new mined diamond.

Why are jewelers pushing lab-created diamonds? ›

Man-made fad

"It's a manufactured version of one of humans' most valuable natural resources," Zimnisky said of lab-grown stones. "It allows consumers to buy a diamond at really affordable prices, especially very large diamonds that would cost tens or hundreds of thousands of dollars if they were natural diamonds."

Can a jeweler tell if a diamond is lab created? ›

Jewelers can tell if a diamond is lab grown through various gemological tests. They may use equipment like a DiamondView tester, which relies on a. Additionally, many jewelers work with accredited diamond grading labs who provide documentation, such as grading reports, confirming the origin of the diamond.

Are there any downsides to lab-grown diamonds? ›

Here's the Short Answer. Lab-created diamonds are chemically the same as natural, mined diamonds. They are more affordable, but their value likely will not hold up over time. They will also never have the same rarity, uniqueness and meaning as a natural stone that was formed over billions of years deep in the earth.

Why are lab-grown diamonds not popular? ›

As one industry analyst put it, "Lab-grown diamonds are like fast fashion. They are trendy and cheap, but they are not timeless or valuable." Another reason why lab-grown diamonds may face a decline in popularity is the lack of transparency and regulation in the market.

Will lab-grown diamonds pass a diamond tester? ›

Will Lab Diamonds Pass A Diamond Tester? Yes, lab diamonds have the same carbon composition as natural diamonds. Therefore, they have the same thermal conductivity. The test results are positive when exposed to the diamond tester, since the diamonds have the same physical and chemical properties as natural diamonds.

What is the prediction for lab-grown diamonds? ›

The global lab grown diamonds market has grown rapidly in recent years. It will grow from $23.3 billion in 2023 to $25.68 billion in 2024 at a compound annual growth rate (CAGR) of 10.2%.

What is the future of lab-grown diamonds? ›

In the future, lab-grown diamonds will likely continue to play an increasingly important role in the jewellery industry. As technology advances, lab-grown diamonds are poised to become an increasingly popular choice for jewellery lovers worldwide.

What is the outlook for the lab grown diamond market? ›

The global CVD lab grown diamonds market was valued at USD 11.3 billion in 2022 and is projected to reach USD 15.9 billion by 2027, growing at 7.1% cagr from 2022 to 2027.

Are diamonds going to get cheaper? ›

Jewelers are anxiously looking forward a hotter engagement season after a tepid year of sales, with prices across all diamond categories plunging around 30% in 2023. For lower-quality and smaller diamonds, prices plunged to their lowest levels in about 10 years, according to Paul Zimnisky, a leading diamond analyst.

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