Just like a pure diamond, a lab-grown diamond is graded based mostly on the 4Cs — readability, colour, reduce and carat weight.
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Demand for lab-grown diamonds in India has grown steadily, however naturally mined diamonds will not be dropping their sparkle any time quickly, trade specialists say.
India at present has the world’s largest youth inhabitants. An increasing number of millennial and Gen Z buyers have been captivated by the so-called LGDs due to their worth level, analysts instructed CNBC.
The worth of a lab-grown diamond could be 5 occasions cheaper than a pure diamond, however they’re each chemically an identical.
In response to Limelight Diamonds, certainly one of India’s largest LGD jewellery manufacturers, a pure diamond is priced at round $6,000 per carat whereas its LGD counterpart is simply $1,200.
Each are additionally graded based mostly on the 4Cs — readability, colour, reduce and carat — the extensively accepted customary traits to find out a diamond’s worth and high quality.
Gross sales of LGDs have skyrocketed as consumers in India who have been beforehand unable to buy diamonds as a result of their excessive price now really feel they’ll enter the market.
“Beforehand, lower than 5% of Indian ladies have been capable of afford pure diamonds,” mentioned Pooja Sheth, founder and managing director of Limelight Lab Grown Diamonds.
“However shoppers are feeling it is extra worth for cash to buy a lab grown diamond and there’s a enormous quantity of incremental demand from new purchases who’ve by no means purchased a diamond earlier than,” she commented.
India is at present the second-largest lab-grown diamond producer, behind China which accounts for a minimum of half the world’s manufacturing.
Edahn Golan, the CEO of Edahn Golan Diamond Analysis and Information, mentioned he is optimistic the South Asian nation may quickly be No. 1.
China’s LGD market is larger when it comes to manufacturing, however it’s not sharpening as many gems as India, Golan defined. “The know-how that’s utilized in India is way extra subtle, and has rather more room for enchancment over time sooner or later,” he instructed CNBC in a telephone interview.
“China could make extra diamonds with the know-how they’re utilizing, however India could make extra, and make them higher.”
Likelihood to improve?
Limelight Diamonds has bought 10,000 carats value of LGD jewellery from April 2022 to March this yr, in keeping with the corporate. Sheth claimed the corporate has already seen almost twice as a lot gross sales from simply April to September this yr.
Nevertheless, Sheth identified that many consumers will not be essentially spending much less when shopping for LGDs.
“Lab grown diamonds have offered a buying improve. Regardless that costs are cheaper, many will not be decreasing their budgets,” she mentioned.
“They’re both upgrading themselves with an even bigger rock, or shopping for a pendant and [a pair of] earrings with that.”
First girl Jill Biden, U.S. President Joe Biden and Indian Prime Minister Narendra Modi take part in an arrival ceremony on the White Home on June 22, 2023.
Anna Moneymaker | Getty Photos Information | Getty Photos
A lot of the optimism surrounding LGDs in India could be attributed to Prime Minister Narendra Modi’s state go to to the White Home in June when he gifted First Woman Jill Biden a 7.5 carat gem that was made within the South Asian nation.
“The notion in the direction of lab grown diamonds all of the sudden modified and that actually altered the expansion of lab grown diamond acceptance within the nation,” Sheth mentioned.
“It is about opening up a whole phase of Indian audiences that haven’t been capable of buy diamonds earlier than.”
Pure diamonds nonetheless dazzle
Regardless of a lot optimism, LGD consumers nonetheless view the jewel as an entry level to the diamond market and can most probably buy pure diamonds after they have a extra buying energy in future, analysts instructed CNBC.
“Lab-grown diamonds are actually the discuss of the day. However If in case you have sufficient cash floating round, you will basically purchase a naturally mined diamond,” mentioned Tehmasp Printer, CEO of the Worldwide Gemological Institute.
“Millennials and Gen Zs could go for a LGD after they need to get married, however swap to a naturally mined diamond down the street,” Printer instructed CNBC.
“If in case you have a Toyota, you will need to purchase a decrease finish BMW after earlier than you lastly get a [Mercedes-Benz] S-Class. It is a query of improve.”
Spending on jewellery elevated through the pandemic when cash couldn’t be spent on journey or providers
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Paul Zimnisky, CEO of Paul Zimnisky Diamond Analytics, agreed.
The expansion of the LGD market won’t make a marginal shift on pure diamond gross sales, Zimnisky mentioned.
“Man-made diamonds characterize round 20% of the whole trade within the worth bought. It was mainly zero 10 years in the past, so it has been rising quickly on a relative foundation,” he mentioned.
“However I believe it could be incorrect to say that is the first motive why the diamond worth is softer this yr. It is largely a return to normalization.”
Zimnisky highlighted that spending on jewellery elevated when Covid restrictions have been lifted globally, pushing diamond costs to their peak in February 2022.
Costs have come down by 25% since then, in keeping with Zimnisky’s International Tough Diamond Index.
Information from the analytics agency predicted that demand for international diamond jewellery will fall to $81 billion this yr from $89 billion in 2023, which continues to be increased than $75 billion in 2019, earlier than the pandemic hit.
Nevertheless, Zimnisky cautioned that bother may very well be not far away for LGDs if costs for the gem proceed to fall too due to how quickly they’re being produced.
“I believe the worth at retail is not reflective of how low the uncooked materials costs are and the retail worth for the man-made diamond may actually proceed to go decrease … that is the danger for the lab diamond trade,” he warned, predicting {that a} three-carat LGD solitaire ring may ultimately promote “effectively beneath $1,000.”