Has the domestic retail market prices fallen?, Global Rough Diamond Price "Dive" Diamond | Price | Dive

At the end of June, the news of diamond prices plummeting went viral. According to CCTV Finance, global rough diamond prices have fallen by 6.5% since the beginning of this year, and the latest index has fallen by 18% from its historical high in February 2022.

But recently, reporters visited multiple chain jewelry stores and learned that the sales price of diamonds on the consumer retail end has not been affected by the aforementioned price fluctuations. Some salespeople say that the price of diamonds has been rising in the past two years.

Analysts believe that the current adjustment in diamond prices after experiencing a sharp rise in the pandemic is normal. In China, the proportion of people who solely invest or collect diamonds is not large. The main group of people who purchase diamond jewelry is couples who are getting married and engaged, consumers who wear daily jewelry, and specific groups with a need for commemorative gift giving.

Has the price of diamonds dropped

According to a report by CCTV Finance citing the CNBC website in the United States, the global rough diamond price index released at the end of June showed that diamond prices have fallen by 6.5% since the beginning of this year, a drop of 18% from the historical high in February 2022. Analysts believe that the price of diamonds will further plummet.

But currently, the fluctuation of rough diamond prices has not yet affected the domestic retail market.

The reporter recently randomly visited some brand jewelry stores in Shanghai. In the stores of brands such as Chow Tai Fook, Lai Sen Tong Ling, and Kimberley at New World Daimaru Department Store, salespeople have informed that the price of diamonds has not fluctuated significantly compared to last year. "Our prices have not dropped here, and the price of diamonds in our store has been rising for the past two years," a salesperson at Zhou Dasheng's store told reporters.

However, some brand stores may offer some discounts during promotions, such as the sales staff at Liufu Jewelry and Zhoushengsheng stores who can apply for a 10% discount, while diamond products at Zhoushengsheng stores are 80% off; The Xie Ruilin store at Hyatt Plaza offers discounts based on specific products, without a unified discount.

In the second-hand trading market, the person in charge of Hongbulin told reporters that the decline of raw stones has no significant impact on the current secondary market. "The main group of people who purchase diamond jewelry first are couples who are getting married and engaged, consumers who wear daily jewelry, and specific groups with a need for anniversary gifts. Compared to those who invest or collect diamonds alone, it is not significant." The person in charge believes that the market fluctuations caused by the decline in the price of rough diamonds should not affect the purchasing intention of the "hard need" population, but may also increase the trading volume of diamond jewelry.

In fact, global diamond prices experienced several rounds of sharp increases after the 2020 pandemic. A report from Guosheng Securities stated that natural diamond reserves are limited, and the epidemic has increased supply pressure. Since 2019, the outbreak of the epidemic has seriously disrupted normal mining operations, and the global production of natural diamonds in 2020 has decreased by 20% year-on-year.

In just one year in 2021, De Beers, the world's largest diamond supplier, adjusted diamond raw stone prices six times, causing raw stone prices to far exceed pre pandemic levels. At that time, De Beers gave the reason that the decrease in raw stone production and strong market demand led to a shortage of diamonds.

Bain Consulting released its Global Diamond Industry Annual Report in 2021, stating that due to the impact of the pandemic, jewelry consumption in the past year has shifted towards localization, with China being the biggest winner. Due to travel restrictions for Chinese consumers, they have turned to local retailers and Hainan duty-free shops for shopping. In the long run, once global tourism resumes, this trend will subside, but new consumers in second - and third tier cities will support sustained demand for diamond jewelry and drive further development of the Chinese market.

Wang Shu is an individual jeweler, and what impressed her deeply was that in early 2022, when she picked up goods from a supplier, she found that the previous supplier had raised the price. "Previously, the maximum annual adjustment was around 10%, but after the Chinese New Year in 2022, some suppliers suddenly raised prices by 20% -30%, which is exaggerated." She told reporters, "Even if prices fall now, it is normal. The previous increase was too much. If they can continue to fall, it will take some time to reflect in the finished product market. After all, now everyone is selling high priced inventory from before." "

Wang Shu told reporters that if the rough raw stone only briefly drops, it may not necessarily be reflected in the sales of finished products, because the price structure of diamond products is relatively complex. In addition to the raw stone itself, the cost structure of design finished products also includes inlaid gold jewelry, other gemstones, design fees, labor costs, and brand premiums, etc.

What is the future trend of the market

Although the retail price of diamonds is increasing, the reporter noticed that the performance of listed companies specializing in diamonds is not ideal.

Dia Group is the parent company of the well-known proposal diamond ring brand DR. The 2022 annual report shows that the company's operating revenue was 3.682 billion yuan, a year-on-year decrease of 20.36%; The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was 613 million yuan, a year-on-year decrease of 50.88%. Another company, Laishen Tongling, whose main business is diamond jewelry design and sales, had a revenue of approximately 912 million yuan in 2022, a year-on-year decrease of 31.09%; The net profit loss attributable to the shareholders of the listed company is approximately 39.73 million yuan.

Analysts believe that diamonds are not easy to sell for other reasons besides being expensive. The diamond ring once focused on the marriage market, but the number of registered marriages nationwide has been declining year after year. According to data from the Ministry of Civil Affairs, the number of marriage registrations has declined from 13.47 million in 2013 to 7.64 million in 2021, and in 2022, it has fallen below 7 million to 6.833 million. So companies like Dia mainly sell proposal diamond rings and wedding matching rings, and their main focus is on the purchase rule of "men can only customize one ring in their lifetime" and the brand concept marketing strategy of "only give one person a lifetime", which leads to a low repurchase rate and limits market space.

Huang Shaoji, the Managing Director of Chow Tai Fook Jewelry Group, does not believe so. In his view, the diamond consumption market, which has already reached a scale of billions, still has great potential in the future. He expects the number of marriage registrations to remain between 6 million and 7 million this year.

"Last year, some people postponed, but this year there should be a little more. If there is still a lot of space in the domestic wedding market, and in recent years, another market has also begun to rise, which supports one's own preferences," Huang Shaoji said. "The attitude of" I like it, buy it "is becoming more and more common, so products with personality and design aesthetics are particularly popular.". "We not only sell wedding diamonds, but there are several other series that sell well and can be worn on a regular basis, suitable for different scenes. This is gradually rising."

However, the head of the marketing department of another jewelry chain brand revealed to reporters that based on the current sales situation, the sales proportion of diamonds in the entire industry is expected to decrease this year. "The attention to gold is too high, and everyone has the opportunity to buy gold if they have extra money." She said that if it's just consumption, then buy what you like on a conditional basis. If you consider future preservation, then gold is the first choice compared to other jewelry.

The person in charge of the aforementioned Red Bullin told reporters that with the rise of the secondary market, the market share of diamond jewelry in the secondary market is still relatively high. As a hard currency commodity, diamonds will have a faster monetization speed compared to bags and watches. In the future, diamond jewelry will have more advantages in the secondary market. Compared to the wear and tear caused by daily wear on bags and watches, diamonds have high hardness. If not damaged by human factors, second-hand diamonds are almost indistinguishable from first-hand diamonds.

The reporter saw on some second-hand platforms that compared to first-hand diamonds, the prices on second-hand trading platforms are obviously more down-to-earth. The price of 95% new diamond products from big brands is only about 50% of the original price.