Lab-Grown Diamonds: Demand Rises, Prices Fall

Russell Shor

March 18, 2019

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This 5.19 ct near-colorless type IIa CVD synthetic diamond is one of the largest faceted CVD synthetics seen at GIA. GIA photo

The proliferation of laboratory-grown diamonds into the market continues to dominate industry news.

A new report says demand for lab-grown diamonds has experienced “significant growth” from attractive marketing, but that prices for such goods have declined 70% in the past two years. The report, compiled by Bain & Co. and published by Rapaport, says the price decline is caused by improving technology that lowered production costs.

The consulting firm also noted that its consumer survey found that demand for lab-grown diamonds falls off sharply when their price tops $1,000 per carat.

Lab-grown producers, other than De Beers/Lightbox, claimed in the report that demand is running above supplies for their products, so prices are not dropping – especially for larger stones that remain difficult to produce.

The Bain view, however, is that prices will likely continue to decline to the point where the two markets “separate themselves,” similar to what happened with colored stones.

NATURAL DIAMONDS

The world’s two largest diamond miners – De Beers and Alrosa – continued cautious supply policies into the first third of the year. Both cut back on rough sales compared to last year, as their clients – diamond manufacturers – complain of softening prices and rising inventories, especially of small, lower quality goods.

The De Beers February/March cycle totaled $490 million, a 13% decline from the same period last year, but the firm held the line on prices after lowering them on some goods last fall. The trade generally welcomed the lower allocations, which include sight sales and individual deals, but claimed that softening polished prices have cut margins.

De Beers production also slid about 10% in 2018 – 32 million cts compared to 35 million cts in 2017 – although revenues increased 4% as the company shifted more of its sales toward higher quality goods.

De Beers noted: “The outlook for 2019 global diamond jewelry consumer demand faces a number of headwinds, including the risk of a potential intensification of U.S.-China trade tensions, the Chinese government’s ability to rebalance economic growth towards consumption, and further exchange rate volatility,”

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