The prices of rough diamonds, especially in one of the most popular categories, have seen a drop in their prices, and along with this, the demand for diamonds as such has generally decreased. According to analysts of brokerage companies and financial strategists of the precious stones market, the reduction in demand for diamonds was practically manifested to a greater extent already last year 2022, after the end of the global Covid-19 pandemic, when demand continued to thin out. In particular, Americans now prefer, for example, engagement rings or other jewelry with technical diamonds that come from laboratory-produced stones. Stones used in one- or two-carat solitaire rings, which are particularly popular in the U.S., have seen their prices fall more sharply than the rest of the market, Bloomberg reported.
According to diamond market analysts, the reason for the decline is the rapidly growing demand for synthetic diamonds. Manufacturers of synthetic diamonds have paid special attention to this category, where consumers are particularly sensitive to price, and the effort is paying off in the US. However, analysts warn that this does not mean that the prices of engagement rings should fall sharply. The impact is limited to the rough diamond market, an opaque world of miners, traders and dealers that is a far cry from jewelry store price tags. However, the extent and speed of the price drop in one of the most important categories in the diamond industry sent shockwaves through the market. The question now is whether the decline in demand for rough diamonds in this category represents a permanent change, and whether interest in synthetic diamonds will eventually spread to the more expensive stones typically bought by Asian companies.
One of the clearest signs of the rise of synthetic diamonds is their share of exports from India, where roughly 90 percent of the global supply is cut and polished. In June, synthetic diamonds accounted for roughly nine percent of the country’s diamond exports, up from one percent five years ago. Given the sharp drop in the prices at which they are being sold, that means 25 to 35 percent of the volume is now lab-grown diamonds, Liberum Capital Markets said. Synthetic diamonds are currently undercutting demand for natural diamonds, but the industry is also struggling. The prices of synthetic diamonds have fallen even steeper than the prices of natural diamonds and are being sold at a greater discount than ever before. About five years ago, synthetic diamonds were about 20 percent cheaper than natural diamonds, but today the price is up to 80 percent lower as sellers push prices down and costs fall. This year alone, the price of polished stones on the wholesale market has fallen by more than half.