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The era of "one forever" is over? World's largest diamond maker sells $ 1.4 billion less this year

2019-12-22 19:07:04 TKD CO., LTD Reading 5 Times

The global diamond industry is in crisis, and the charm of "one forever" has gradually disappeared.

The latest figures from diamond giant De Beers prove it. On December 18, De Beers announced that it expects sales of $ 425 million in the last sales cycle of the year. This means that the company's full-year sales will plummet 25.9% year-on-year to $ 4 billion, a decrease of nearly $ 1.4 billion from the previous year.


Earlier in November, De Beers had cut the price of rough diamonds by about 5% in response to the growing industry crisis.

Diamond giant sales plummet

De Beers publishes sales data 10 times a year. The last sales data released this year, De Beers' performance slightly increased by 6.25% from the previous cycle to 425 million US dollars, but still far from the 544 million US dollars of the same period last year.


There is little good news for the diamond industry this year.

Affected by the continued downturn in sales, in October of this year, De Beers cut diamond prices by about 5% across the board, and in addition has been investing more money in advertising to boost consumer demand.

According to the "Global Diamond Industry Annual Report" jointly issued by American management consulting firm Bain and the Antwerp World Diamond Centre this month, global demand for polished diamonds and rough has declined. Coupled with the depreciation of the US dollar, global diamond sales in 2019 will fall by 2% year-on-year.

Among them, the sales of rough diamonds are particularly bad, which will fall by 25%; the sales of polished diamonds are not optimistic.


Bain Company said that due to the slowdown in global diamond jewellery demand, declining diamond content in jewellery design, optimization of inventory by major retailers, and reduced financing available to midstream companies, polished diamond sales are expected to decline by 10% to 15% by the end of 2019.

Earlier this month, De Beers issued a statement predicting that diamond mining in 2020 and 2021 will reduce 1 million carats from previous expectations.

At the beginning of August, the company also announced that for small rough diamonds weighing less than 3/4 carats, diamond buyers can buy only about half of a certain amount, and can also resell some rough diamonds to De Beers at a low price.

In July this year, mining giant Rio Tinto said that the company's Argyle diamond mine in Western Australia will be closed by the end of next year. Argyle is the world's largest diamond mine, producing approximately 14 million carats of diamonds per year, accounting for two-thirds of global production. Its most famous is that about 90% of the world's pink diamonds come from here.


The rise of the artificial diamond industry

The story behind the success of diamonds must be familiar to everyone.

In dollar terms, diamond prices rose more than 11 times from 1960 to 2016. Based on the U.S. Bureau of Labor Statistics consumer price index, the cumulative inflation rate in the United States during these years is about 711%-the rise in diamond prices far ahead of inflation.

In 1939, De Beers started the slogan "A diamond is forever", and after entering China, it became "a diamond that lasts forever, and it will last forever." When diamonds became a witness to love, buying diamond rings became just needed, and the price of diamonds began to soar.

The Chinese market has high hopes. The De Beers report shows that in 2018, 70% of U.S. residents had diamond jewelry, while only 20% of urban residents in China owned diamond jewelry, and China's diamond jewelry market still has broad development space.

However, the arrival of artificial diamonds has caused a certain impact on the symbolic meaning of diamonds.


De Beers firmly resisted artificial diamonds in 2016 and even introduced instruments to identify artificial and natural diamonds. However, as the wind of artificial diamonds blows, the figure of the big brother also puts it down. De Beers launched the new synthetic diamond brand Lightbox in the United States last September, causing a commotion in the industry and being regarded as a major turning point in the natural diamond business.

In 2017, the average selling price of synthetic diamonds was only 10% -20% cheaper than natural diamonds. One year later, the gap had widened to 30% -40%. According to Nikkei News on August 2, 2018, with the advancement of technology, laboratory-made diamonds have long been used in industrial production. Chinese laboratories are not only able to make smaller, yellow gems, but also larger, colorless gems, and have broadened their use in the jewelry industry. Diamond laboratories in China usually have thousands of synthetic equipment, each of which can produce 100 gems at a time.

In May 2019, China South Industries Group Yuxi Group Zhongnan Diamond Company launched a large-size "jewelry diamond". At present, Yuxi Group has mastered the technology of large-scale high-temperature and high-pressure diamond single crystal synthesis within 20 carats, and has mastered the production techniques of yellow, blue, green, and purple-red diamonds. Carat-class cultivated diamonds with the largest grain size, the best grades, and controllable colors are realized in batches.


The research and development of the above projects has successfully opened up new application fields for cultivating diamonds, broken the monopoly of mainstream raw materials in the field of diamond jewelry by foreign giants, and enabled China to lead the world in the mainstream of diamond jewelry.

The diamond industry has two major profit-gathering areas, one is the diamond rough, the finished bare stone, and the other is the brand's premium. However, China does not have the ability to supply rough embryos and bare stones, nor does it compete with world-class diamond jewelry brands. The lifeblood of the diamond industry is in the hands of international giants. Many Chinese diamond traders, cutting mills, inlay enterprises, and jewelry brands can only make relatively modest profits.


Slightly pleased that in 2018, domestically produced and supplied gem-grade cultivated diamonds accounted for about 3.75 billion yuan, which represented a geometric growth compared to 40 million yuan in 2016.

In 2018, China's production of gem-grade cultivated diamonds reached 1.3 million carats, accounting for more than 90% of the global total, and has become the world's largest raw material producer for cultivated diamonds.

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