From the data released yesterday by India’s Gem & Jewellery Export Promotion Council (GJEPC), the total import and export value of lab-grown diamonds in India for the first three quarters of this year (i.e., January to September) has remained roughly the same as last year. Considering the price reductions over the past year, it is estimated that the volume of imports and exports (in carats) has significantly exceeded the same period last year.
Detailed Data:
Rough Diamond Imports
- September 2024: $63 million, YoY -25.58%, market share 7.50%
- July-September 2024: $268 million, YoY -20.46%, market share 10.18%
- January-September 2024: $812 million, YoY -2.14%, market share 7.58%
Polished Diamond Exports
- September 2024: $111 million, YoY -16.50%, market share 7.91%
- July-September 2024: $305 million, YoY -14.24%, market share 8.62%
- January-September 2024: $1.002 billion, YoY -4.14%, market share 8.39%
Market Share Changes in Polished Diamond Exports
Considering the importance of downstream markets, we compared the market share changes of polished diamond exports for the first nine months of the past four years (as shown in the chart below).
After comparison, we found that except for a slight decline in April, the other months showed a noticeable increase, significantly surpassing pre-pandemic levels. This indicates that downstream retailers are increasingly accepting lab-grown diamonds year by year. Given the price reduction trend of lab-grown diamonds over the past four years, the growth in downstream holdings should be far greater than what is shown in the table.
Summary and Speculations
Overall, the total import and export values for the first three quarters of this year have remained basically consistent with last year. Considering the price reductions over the past year, it can be estimated that the throughput (in carats) has grown rapidly.
From a month-to-month perspective, the value of rough diamond imports has shrunk significantly, which may imply an increased demand for smaller and lower-priced rough diamonds in India. We have also received similar information from the market previously.
The growth in demand for small rough diamonds may mean that more small polished diamonds will be available for jewelry setting, which could be positive news for manufacturers in this segment.
Of course, the overall price reduction of rough diamonds will likely have an impact on upstream producers, who may need stronger "supply chain penetration" capabilities and must constantly pay attention to and influence the downstream market.
Polished Diamond Export Stability
In contrast, the situation for polished diamond exports has remained relatively stable. If we back-calculate based on a 50% YoY price reduction, export volume (in carats) should have increased by about 60% YoY in Q3 this year. This suggests that downstream retailers have received more lab-grown diamond products compared to last year in preparation for the holiday season.
It is worth noting that some institutions previously reported that downstream market inventory of lab-grown diamonds is increasing, which will put some pressure on the "price of lab-grown diamonds." Subsequent commentary suggests that this "price" description is overly vague and limited.
Specifically, in the largest U.S. market, about 70% of lab-grown diamonds (polished diamonds) are consigned to retailers. This represents a transfer of inventory, with wholesalers assuming most of the risk. As a result, some have commented that for retailers, not only is inventory pressure reduced, but they can also meet end-consumer demand in a more flexible manner (such as by increasing design options and adjusting inventory ratios). Therefore, retail unit prices are unlikely to fall significantly.
There is a caveat: these are "true retailers" with design capabilities, marketing influence, and brand management skills.
For wholesalers, the temporary transfer of inventory does not ease the actual inventory pressure, so when new stock arrives in large quantities, wholesale prices inevitably face downward pressure. Under the risk of further reduced wholesale profits, it remains a delicate question how many players will choose to exit the market.
Moreover, the natural evolution of the market and its potential effects are also worth contemplating.
Therefore, the growth in lab-grown polished diamond inventory has different effects on wholesalers and retailers. The data from India, in some ways, leaves us with a complex question mark.