Why do diamond prices in branded jewelry stores not change much?, Global diamond prices plummet by nearly 20% | Diamond | Global

Recently, according to the CNBC website in the United States, the latest global rough diamond price index released shows that diamond prices have fallen by 6.5% since the beginning of this year, and have fallen by 18% from the historical high in February 2022. A 1 carat natural diamond, slightly above average quality, was priced at $6700 a year ago, but now the same diamond is priced at $5300.

As soon as the news came out, topics such as "diamonds do not hold their value", "diamonds are the biggest lie in love", and "diamond prices will continue to decline" sparked heated discussions on the internet. Since the beginning of this year, a variety of jewelry such as pearls, jadeite, colored gemstones, and gold have been increasing in price, with only diamonds showing a downward trend.

Has the price of diamonds really fallen? Ms. Zhang, who just bought a wedding diamond ring, raised a question. The 1 carat luxury brand diamond ring she purchased has not been discounted, not even given any discounts. The salesperson even told her that the price will increase.

For this reason, Chao News reporters visited domestic and foreign jewelry stores such as De Beers, Cartier, Tiffany's, Chow Tai Fook, and Chao Hongji in Hangzhou, and found that the actual sales price of diamond jewelry did not change much.

Why has the diamond market been continuously declining?

Recently, the International Diamond Exchange released its latest price index report, stating that the diamond index has fallen by more than 22% from its peak in March 2022 and has been continuously declining for 15 months.

According to the Diamond Industry Insider released by the Shanghai Diamond Exchange, international diamond giant and South African diamond mining company De Beers saw a 20% decrease in rough diamond sales during its fourth trade fair, due to slowing demand in China. Due to the buyer's low mood, the company also cancelled the auction.

Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center at the International Business School of Zhejiang University, pointed out that diamond prices are the result of a two-way interaction between supply and demand. From the demand side, the main application scenarios of diamonds are deeply tied to marriage, with the main market being East Asia. Due to various reasons, East Asia has experienced a decline in marriage rates, which objectively compresses the demand market for diamonds. On the other hand, the correlation between diamonds and love is also weakening, and after centuries of marketing, consumers generally experience aesthetic fatigue.

Taking China as an example, according to data from the Ministry of Civil Affairs, China's marriage data has been declining year by year since 2014. In 2013, it was 13.4693 million couples, fell below the 10 million pair mark in 2019, and then fell below the 8 million pair mark in 2021. In 2022, the number of marriage registrations in China decreased by 803000 pairs compared to the previous year, a decrease of approximately 10.5%.

During the interview, the reporter found that due to the low resale value of diamonds, young people have also developed the idea that "buying diamonds is better than buying gold". Last month, Xiaocao, who had just gotten married, told reporters that he and his wife had prepared 100000 yuan to purchase wedding jewelry. However, considering the resale value of the diamonds, he and his wife negotiated and only spent more than 10000 yuan to buy diamond rings, while the rest of the money was spent on gold bars.

It is worth noting that in recent years, with the continuous progress of artificially cultivated diamond technology, its chromaticity and clarity are also better than natural diamonds. More and more consumers are turning to purchasing artificially cultivated diamond products, which has put pressure on the demand for natural diamonds to a certain extent.

In a jewelry store in Hangzhou that specializes in cultivating diamonds, the reporter found that the price of diamonds can be as low as 100 yuan, and the highest is less than 30000 yuan. One of the highest color and clarity 1-carat diamond rings is priced at only 20000 yuan. "This D-colored diamond has all the indicators that surpass natural diamonds, and this quality is very rare among natural diamonds." The salesperson told reporters that the price of cultivated diamonds of the same quality is only a few tens of times that of natural diamonds. "Cultivated diamonds and natural diamonds are both diamonds, which is the difference between the ice in the river and the ice in the refrigerator. Nowadays, young people care about having enough ceremony at weddings, rather than whether diamonds are natural or artificial," said the salesperson.

Mr. Zhao, who is currently purchasing and cultivating diamonds in the store, told Pan Helin that starting from 2019, China has determined the path to develop artificially cultivated diamonds, such as in Zhecheng County, Shangqiu City, Henan Province, which achieved poverty alleviation and wealth through artificially cultivated diamonds. It is not difficult to artificially cultivate diamonds, for example, by imitating the natural diamond formation environment through high temperature and pressure, or by chemical deposition, a small diamond seed crystal is required to attach carbon elements, and eventually become a large diamond. Internationally, there are also many practitioners who promote the cultivation of diamonds. For example, the International Diamond Association recognizes the cultivation of diamonds as diamonds and no longer distinguishes between cultivated diamonds and natural diamonds.

According to Ruan Xizi, a director of the International Association of Colored Gemstones, in addition to the shrinking wedding market leading to a decrease in consumption in the main diamond market, from the perspective of the high-end market, colorful gemstones have become increasingly popular in the market in recent years. Diamonds that lack personality, apart from the value and beauty they create, are relatively monotonous, which gradually makes diamonds cool.

So, what will be the future diamond prices? Pan and Lin said that diamond prices are bound to plummet, which also stems from the first principles of physics, which start from the source. Because carbon is cheap and easy to obtain, diamonds are just a manifestation of carbon, so diamonds will ultimately be cheap and easy to obtain.

Has the consumer price dropped?

Jewelry store staff displaying natural diamond rings

"We haven't received any notice of price reduction, and the price of our brand's diamond rings has been stable. There is a possibility of price increase in the future." A salesperson from De Beers, an international jewelry brand in a shopping mall in Hangzhou, told Chao News reporters that the diamond prices of this brand are all real prices and there is no room for discounts.

The reporter saw in front of the counter that the price of De Beers diamond rings is generally above 50000 yuan, ranging from several hundred thousand yuan to millions of yuan. The salesperson explained that each natural diamond is different, and its size, cutting, clarity, and color determine its price. A diamond with a size of 50 points is only half the price of a 1-carat diamond. Similarly, for a 1-carat diamond, the higher the clarity and color level, the higher the price. Conversely, the lower the price, and the price difference can even reach several times.

When it comes to whether diamonds retain their value, sales told Chao News. Similarly, when reporters walked into international brand stores such as Cartier and Tiffany to inquire about prices, sales consistently stated that the diamond ring price had not been reduced or discounted. Among several major international brands, there is almost no difference in the price of diamond rings of the same level, and most of the diamond rings sold are priced at over 50000 yuan.

1 carat diamond ring in Tiffany's store

Subsequently, the reporter also visited well-known domestic jewelry brands such as Chow Tai Fook and Chao Hong Ji, which displayed natural diamond rings with prices ranging from thousands of yuan to tens of thousands of yuan. Most categories were priced between 10000 and 30000 yuan, making them more affordable compared to international brands.

At the Chaohongji store, the staff claimed that all of their diamonds were sourced from De Beers, a South African diamond mining company. However, diamonds of the same quality are priced at only two-thirds of the De Beers brand, or even lower. "The brand premium of luxury goods is relatively obvious, and the diamond cost-effectiveness of domestic brands is relatively high," said the salesperson. At the same time, the salesperson showed the reporter a 1-carat diamond ring priced at over 120000 yuan in the store, with a discount of 77% off, which is less than 100000 yuan after the discount. The salesperson stated that the price has not changed much compared to before.

Regarding the issue of the resale value of diamonds, Ruan Xizi stated that natural diamonds, as natural gemstones, have a scarcity that determines their financial role in preserving and increasing their value. At the same time, the reporter also consulted Mr. Wu, the owner of a luxury goods recycling store in Hangzhou. He told the world that diamond prices have decreased, why do diamond prices in jewelry stores still not change much?

Ruan Xizi told Chao News reporters that the downward trend in diamond prices was already evident at the Hong Kong Jewelry Exhibition in March this year; However, the continuous rise in the exchange rate of the international gemstone settlement currency unit, the US dollar, and the record high gold price have not yet brought significant price changes to finished jewelry.