Diamonds On The Decline: What’s Behind The Shocking Drop In Prices And Market

India

oi-Saumya Joshi

Diamonds,
once
heralded
as
the
epitome
of
luxury
and
eternal
value,
are
witnessing
a
significant
downturn
in
their
market
prices.
This
trend
is
raising
concerns
and
prompting
questions
about
the
future
of
these
precious
stones.

Despite
India
sitting
on
a
substantial
stockpile
of
diamonds,
both
synthetic
and
natural
diamond
prices
have
plummeted.
Let’s
delve
deeper
into
the
reasons
behind
this
decline
and
its
broader
implications.

What
Happened?

The
diamond
industry
has
been
grappling
with
falling
prices
for
nearly
two
years.
According
to
The
Times
of
India,
both
synthetic
and
natural
diamonds
have
seen
their
values
decline,
with
natural
diamonds
being
particularly
affected.
Ashok
Gajera,
CMD
of
Laxmi
Diamonds,
described
the
situation
as
dire.

“It
would
be
an
understatement
to
say
that
business
has
been
slow.
Diamond
rates
have
been
falling
for
the
past
22
months,”
Gajera
told
the
newspaper.
This
downturn
has
impacted
everyone
from
large
enterprises
to
small
and
medium
businesses,
with
approximately
38,000
workers
in
Surat
alone
feeling
the
pinch.

Impact
on
the
Market

The
continuous
devaluation
of
diamond
stocks
has
forced
traders
to
execute
orders
at
a
loss.
Gajera
highlighted
the
fierce
competition
from
flawless
lab-grown
diamonds,
which
have
seen
a
dramatic
drop
in
prices
from
$300
per
carat
in
July
2022
to
just
$78
per
carat
recently.

India’s
gem
and
jewellery
exports
have
also
taken
a
hit,
declining
by
13.44%
in
June
year-on-year
to
Rs
15,939.77
crore
($1,909.57
million),
according
to
data
from
the
Gem
and
Jewellery
Export
Promotion
Council
(GJEPC).
The
export
of
cut
and
polished
diamonds
dipped
by
a
staggering
25.17%
in
the
same
period.

Lab-Grown
Diamonds:
A
Rising
Challenge

The
rise
of
lab-grown
diamonds
(LGD)
has
further
complicated
the
market
dynamics.
Nearly
400,000
workers
in
the
lab-grown
diamond
industry
are
facing
hardships,
with
delayed
wages
and
potential
job
losses.

The
Diamond
Workers
Union
of
Gujarat
has
reported
wage
delays
of
up
to
20
days
each
month.
The
value
of
lab-grown
diamonds
has
decreased
by
45%
in
the
past
year,
with
industry
analyst
Paul
Zimnisky
noting
that
these
diamonds
are
now
being
sold
at
90%
cheaper
prices
than
natural
diamonds-a
significant
shift
from
the
10%
difference
seen
in
2015.

Reasons
Behind
the
Decline

Experts
attribute
the
decline
to
a
slowdown
in
global
demand
for
diamonds.
China,
once
a
major
buyer
of
flawless
mined
stones,
has
significantly
reduced
its
purchasing
power
to
just
10-15%
of
previous
levels.
Vipul
Shah,
chairman
of
the
GJEPC,
pointed
out
that
weak
demand
from
key
markets,
particularly
China,
is
a
primary
factor
behind
the
falling
prices.

The
industry’s
woes
are
further
compounded
by
governmental
policies.
Sabyasachi
Ray,
GJEPC
executive
director,
emphasized
the
sector’s
labour-intensive
nature
and
the
significant
impact
of
government
actions
on
the
millions
of
workers
employed
in
the
industry.
“The
gems
and
jewellery
industry
employs
5
million
people,
many
from
marginal
sections.
This
is
a
sector
that
heavily
depends
on
skilled
craftsmen
and
blue-collar
workers,”
Ray
told
The
Times
of
India.

What’s
The
Road
Ahead?

The
diamond
industry
is
at
a
crossroads,
facing
unprecedented
challenges
from
both
market
dynamics
and
global
economic
shifts.
As
the
allure
of
diamonds
dims
amid
falling
prices
and
declining
demand,
the
industry
must
navigate
these
turbulent
times
with
strategic
adjustments
and
a
focus
on
sustainability.
The
future
of
diamonds,
once
seen
as
timeless
treasures,
now
hangs
in
the
balance,
influenced
by
market
forces
and
changing
consumer
preferences.