After a long wait, we finally received the August diamond import and export data from India’s Gem & Jewellery Export Promotion Council (GJEPC).
The rough diamond import data for August showed an interesting shift: there was a significant year-on-year decline in the import of rough natural diamonds, while lab-grown diamond imports experienced a considerable increase. The detailed data is as follows:
Natural Diamonds
- Rough Import Value: $672 million, month-on-month (MoM) -25.37%, year-on-year (YoY) -48.96%
- Rough Import Volume: 5.56 million carats, MoM -28.83%, YoY -53.76%
Lab-Grown Diamonds
- Rough Import Value: $119 million, MoM +39.31%, YoY -11.81%, market share 15.07%
- GJEPC did not disclose the specific import volume, but considering the price reductions over the past year, we can infer that the import volume has increased substantially.
Policy of Limiting Natural Diamond Supply
Considering the current market demand situation and recent communications with Indian partners, we conclude that India’s midstream processing industry is consciously reducing its focus on natural diamond processing.
This "shift in balance" reflects the attitude of the midstream segment of the industry but does not necessarily represent downstream market demand. In terms of rough diamond exports, natural diamonds still showed a MoM increase of +14.21% (YoY -23.80%). Compared to the sluggish market in July, downstream demand in August showed some improvement.
However, considering the specific situations in key markets like China and the United States, the midstream continues to approach natural diamond rough imports with caution.
This cautious approach, combined with upstream miners’ "flexible sales policies," gives us some hope for the supply-demand relationship of natural diamonds—despite the lack of conclusive evidence of a downstream market rebound in the short term.
According to Rapaport’s report released yesterday, major players De Beers and Alrosa have met with buyers in India and Dubai, stating they are "not in a rush to reduce rough diamond prices." Combined with the De Beers breakfast event held at the Hong Kong Jewelry Show on September 19, it is evident that industry giants are striving to maintain the price of rough diamonds. This effort is expected to yield results in the near future.
Opportunities in the Lab-Grown Diamond Sector
From the import data, it is clear that the midstream is currently more welcoming of lab-grown diamond roughs. The reasons are complex, including political requirements to "maintain employment" and optimism about the future of the industry.
In discussions with Indian traders recently, we learned some key reasons behind these points.
- Political Considerations: India wants to maintain the scale of its diamond cutting and polishing industry and protect workers' livelihoods, ensuring its position in the diamond value chain. Compared to the relatively expensive natural diamonds, lab-grown diamonds are currently a more suitable raw material.
- Commercial Perspective: The global downstream market for lab-grown diamonds is still expanding. Therefore, the midstream has every reason to deliver more products downstream through various means (such as consignments, which make up about 70% of deliveries) to meet anticipated market demand, especially in Q4 of this year. This also partly explains Tenoris’s previous report suggesting "growth in downstream lab-grown diamond inventory."
From an export perspective, lab-grown diamonds had a market share of 8.77% in August, higher than 7.96% in the same period last year. Considering the decline in polished diamond prices, this is a relatively positive signal.
Conflict and Reconciliation
Through recent observations and conversations at the Hong Kong Jewelry Show (the complete video can be found at the end of this report), we found the relationship between lab-grown and natural diamonds to be quite nuanced. On one hand, the dispute between the two remains unresolved; on the other hand, more traders are willing to "experiment" with lab-grown diamond products, although there are still instances of indecision.
Based on the current situation, it seems inevitable that lab-grown diamonds will "take a different path from natural diamonds." This represents a developmental direction of mitigating conflict and harmonious coexistence, which, though it will take time, could potentially bring a brighter future for both sectors.