In a move that indicates a slump in the market of the natural diamonds, De Beers, one of the largest diamond trading company and suppliers in the world, have cut their prices by 10% across the board, as the final sale of the year.

Prices for rough diamonds – the raw, unpolished, and uncut stones – have been going down since 2023 as many post-pandemic consumers are shying away from luxury goods, as per media reports.

A report by Bloomberg also points at sliding demand in China for diamonds as one of the reasons for the historic cut.

“We’re going to see a year-over-year decline of sales in the holiday season”, predicted David Johnson, a spokesperson for De Beers, last year.

India’s role & Gujarat connection

The firm spoke of reducing the supply of diamonds in rough form to India in 2023 and there were serious repercussions as the world depends on India for the cutting and polishing of diamonds.

In the case of natural diamonds, the rough diamonds are imported by Indian companies and then cut and polished. Post this, a small quantity of diamonds are converted into jewellery and sold domestically and also finished jewellery is exported. The bulk of the imports are re-exported in cut and polished form.

Surat is one of the most significant places in the diamond trade in India. The place employs thousands of artisans in the business of cutting and polishing. This is a skilled job and there are many families where the skill set has passed from generation to generation.

The city is also famous for textiles but the dominant business is the diamond cutting and polishing. The advent of lab grown diamonds has changed the outlook of this industry completely.

First, the entire value chain of lab-grown diamonds being manufactured today is based in India. These roughs are then cut and polished and then either sold in India or abroad. Jewellery is also made from these and finished jewellery is exported all over the world.

The most important facet of lab-grown diamonds business is that the labour charges paid to the artisan for cutting or polishing is the same per diamond irrespective of the fact that it is a natural diamond or lab-grown diamond.

Second, the entire value chain from diamond manufacturing to cutting and polishing and then converting into jewellery is all captured in India. 

Local demand for lab-grown diamond jewellery has grown as affordability has increased and also acceptability.

COVID changed trends

Industry analysts attribute the slump to declining sales at the jewellery counter, media reported.

As consumers spent less money on dining and travel during the pandemic, “people had excess money to spend on discretionary purchases”, noted Paul Zimnisky, a global diamond analyst, last year.

Diamond prices have adjusted to consumers choosing services over jewellery. 

People are eating out, traveling and spending money on experiences rather than luxury goods, according to analysts.

“Diamonds are a completely consumer-driven market,” the media quoted Edahn Golan, an independent diamond analyst, as saying. 

Shopper demand for diamond jewellery influences rough diamond prices and, to an extent, retail prices. Retailers stoke consumer demand by pouring hundreds of millions of dollars into advertising.

Notably, in 2021 and 2022, demand for natural diamond jewellery was at an all-time high, media reported.

“There was a parabolic move up, and now there’s a correction on the other side,” Zimnisky noted.

However, the winter months are peak engagement season, and Christmas and Valentine’s Day are typically lucrative holidays for jewellery companies.

(with inputs from syndicated feed)