Before the outbreak of the epidemic, some people in the industry believed that as the production of cultivated diamonds increased, natural diamonds would gradually concentrate in segmented markets with large particles and high value, while giving way to small particle and low value markets
Before the outbreak of the epidemic, it means 2019. At that time, the global diamond industry had not yet adjusted from the situation of oversupply. There were sufficient (or even excessive) small grain diamonds on the market, and the wholesale profit was relatively low. So with the rise of cultivating diamonds in the consumer market, it is not surprising that some people have such ideas.
However, from the situation in recent months, the price of small broken diamonds, which were once insignificant, has increased by an unprecedented amount. The two upstream giants (De Beers and Elrosa) have increased the price of small rough diamonds in a quite tacit manner, and the downstream finished diamond quotation list has also been updated accordingly. On January 21st, Thomas from Bloomberg silently typed out a line: "The market is rushing to buy cheap small diamonds.
The strong downstream demand is certainly the most important reason, as the two major markets in China and the United States (especially the United States) have driven up diamond prices. However, in Bates' article, he raised two related questions:
1) Why do natural small diamonds rise in price so quickly?
2) Why do artificially cultivated small diamonds stop reducing their prices?
01
He answered the first question this way:
From a supply perspective, the closure of Argyle is an important reason for the scarcity of small natural diamonds, in addition to factors in the consumer market.
Here is a very important concept:
We have said before that although Aguer Mine is famous worldwide for its powder diamonds, about 95% of its huge production is of lower quality white diamonds, most of which are fine and small particles. For the global diamond supply chain, the biggest threat posed by the closure of Aguerre at the end of 2020 is "causing a reduction", as a sharp decrease in supply can lead to a destabilization of the supply and demand balance.
The rarity of pink diamonds, with or without Aguerre, is actually similar; But if the total amount of diamonds on the global supply chain suddenly drops by 20%, it is a big enough thing to make many people unable to eat. After all, not everyone will buy pink diamonds, but broken diamonds can be circulated in large quantities around the world at all times
In short, from the moment Rio Tinto announced the closure of the Aguer mine, the cheap broken diamonds on the global supply chain have begun to have a "foundation" of shortage. In addition, after the epidemic, the consumer markets of various countries operated fiercely, and the price increase of diamond chips became a "reasonable+expected" outcome.
02
This is the first time I have noticed that the prices of some cultivated diamonds (i.e. small particles) are beginning to stabilize
What about artificially cultivated small diamond particles? Bates has three views on this issue:
1、 Production enterprises prefer large particles
The cultivation technology of large particle diamonds has developed much faster than expected, and almost all Almost all prefer to manufacture and promote large particle and high-quality products with higher profits. The result is that the supply in this segment of the market is rapidly accumulating, and prices will naturally be suppressed.
Note that Bates does not mention 'supply exceeds demand' here.
2、 Downregulation of small particle supply
After several years of continuous price reductions, production companies have realized the fact that profits in this area are declining, so the production of small particles has also been reduced accordingly
Whether Bates' statement is true or not is up to industry friends to judge for themselves.
He also cited an anonymous industry insider's criticism of Chinese HPHT production companies in the article, but I do not intend to publicly paraphrase or interpret it to avoid unnecessary conflicts. After all, everyone understands that in the current international situation, there are several so-called "Western industry insiders" pointing fingers at China. This kind of troublemaker is just a matter of looking at it, and there is no need to promote it. To be honest, if you are an industry insider, don't be anonymous.
3、 Demand remains strong
At the same time, considering the development of the two major fields of jewelry and industry, the overall demand for small particle cultivation diamonds in the market is still strong (whether HPHT or CVD) and is still growing. There is no doubt about this.
The above three points have contributed to the popularity of small particle cultivated diamonds on the market. Under the influence of supply and demand, the overall price of these diamonds has also stabilized from the previous continuous decline.
03
Returning to the quote at the beginning of this article: Will natural diamonds give way to nurturing diamonds in the small particle segment market?
Bates did not answer this question directly, as it is clearly difficult to provide a clear answer at this stage. However, he quoted a diamond wholesaler in the article, which sounds very interesting:
When we supply watch brands, the money spent to prove that 'these diamonds are natural diamonds' is equivalent to all the profits we receive in wholesale. Of course, in the end, we still have no choice but to test every small stone, because the brand needs to be very rigorous in knowing what materials they have purchased - although not all customers require this.
This paragraph is very "smart", after all, transparency is what the entire industry pursues, otherwise the result of always covering up is likely to be explosive. But the sentence at the end, 'Not all customers require it', makes people couldn't help but daydream.
Bates vaguely pointed out in the article that in fact, there is still a phenomenon of "looking very similar" mixing in finished product manufacturers that use a large number of broken diamonds for inlay. Some will mix in some cultivated diamonds, while others will mix in some natural diamonds. Of course, some brand companies will try to remain silent on this matter.
Unfortunately, we don't have Big data to verify or falsify this. What we get is information such as "industry statement" and "company statement". These pieces of information are neither transparent nor traceable, they are just speculation and speculation.
Bates said helplessly, 'On the one hand, we haven't seen any actual survey data, and on the other hand, most consumers may not care how many' different 'things will appear in a pile of broken diamonds.'. Nevertheless, this practice violates the guiding spirit of the FTC (Federal Trade Commission), so it is not a "pre condition" worth advocating.
As for the solution, Bates jokingly said that he has a "no company is willing to accept" approach: why not just write "diamonds" and then add an asterisk to indicate "it may be natural diamonds or cultivated diamonds" when dealing with broken diamonds. This approach is quite "inelegant" and cannot be widely recognized in the industry, but it may be more honest and save money and time.