In a surprising turn of events, Chinese lab-grown diamond manufacturers are raising prices after years of dramatic declines. After an almost 90% drop in prices over the last two years, many in the industry are bracing for a new surge in pricing.
Recently, Chinese companies like Huajing Jewelry and Yellow River Cyclone announced price hikes of 10-13% for lab-grown rough diamonds starting January 2025. This price increase comes at a time when natural diamond giant De Beers has announced a significant price reduction of over 10% in December 2024.
Despite the recent price cuts in the natural diamond market, the demand for lab-grown diamonds surged, reaching 20% of global diamond jewelry sales. Analysts believe the sharp decline in prices earlier, while benefiting consumers, has eroded profits for manufacturers. In contrast, the price increases may signal a rebalance in the industry, as manufacturers look to protect their margins amidst growing production costs and technological challenges.
The rise in lab-grown diamond prices follows a period of deep price cuts, but experts remain cautious. Some are predicting that these increases might not last, especially given the intense competition and the rapidly evolving production technologies within the sector.
The Risks of Price Wars
While the price surge offers some hope to manufacturers, the risk of further “price wars” looms large. Industry observers point to the intense competition among manufacturers, which has already led to significant financial losses for many. For example, Power Diamond, a leading Chinese lab-grown diamond company, reported a 68.39% drop in net profits for Q3 2024.
Despite these challenges, the rise in lab-grown diamond prices represents an attempt to stabilize the market after years of extreme price reductions. However, with major players like Paul Zimnisky and Cormac Kinney predicting more significant price drops, only time will tell if this increase in prices is sustainable.
A Debate Over Technological Competition
Inside the industry, there is an ongoing battle between two main production techniques: HPHT (High Pressure High Temperature) and CVD (Chemical Vapor Deposition). While HPHT produces better colorless diamonds, it struggles to produce larger diamonds. Meanwhile, CVD technology, which produces diamonds with larger sizes and higher purity, is rapidly gaining traction due to its lower cost and quicker production.
The competition between these technologies could dramatically reshape the industry, as companies focus on improving efficiency and reducing costs.
What’s Next for Lab-Grown Diamonds?
As the lab-grown diamond market faces these challenges, the big question remains: will the prices continue to rise, or will the pressure of competition bring them back down again? Given the uncertainty, it's clear that lab-grown diamonds still have a long way to go before they can truly compete with natural diamonds in terms of value, perception, and market stability.