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Wednesday, December 6, 2023

Strong shocks in the synthetic diamond market

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Their price is collapsing, a major company in the US has declared bankruptcy

ΙσχυροΙ κλυδωνισμοΙ στην αγορà των συνθετικoν διαμαντιo&nu ?

Lab-made synthetic diamonds lose their luster after a prolonged bloom period. WD Lab Grown Diamonds, the second-largest producer of man-made diamonds in the US, has filed for bankruptcy, becoming the industry's first major casualty in the wake of a boom in demand for synthetic gems. The Washington, D.C.-based company said it had total liabilities of $44 million, with assets of $3 million.

Lab-grown gemstones pose a significant threat to the natural diamond sector, as consumers – particularly in the US – choose to buy jewelry with lab-grown diamonds that are almost chemically identical to their counterparts mined from the ground.< /p>

Industry leader De Beers has long warned that the lab-grown industry would “self-ignite” as overproduction pushed the industry into losses and prices for engineered diamonds collapsed. Prices for one-carat lab-grown diamonds have more than tripled in seven years as manufacturers continue to flood the market. Founded in 2008, WD Lab Grown Diamonds has pioneered and disrupted the global diamond industry, recording revenues of $33 million last year. Paul Zimniski, an independent diamond analyst, said WD Lab Grown Diamonds was something of a “proxy” for the industry and its collapse made it clear that “it's becoming very difficult for anyone to compete with the Chinese and Indian producers.”

The collapse of a major lab diamond maker is apparently a relief to the natural diamond mining industry, which has seen the explosive growth of synthetic stones as an existential threat. The rough diamond market has come under double pressure, from lab-grown diamonds and from falling demand as consumers cut back on luxury goods.

De Beers last month launched its own line of lab-grown diamonds under the Lightbox brand, but decided not to follow through on its decision to sell engineered diamond engagement rings. WD Lab Grown Diamonds uses a technique called chemical vapor deposition, which sprays a vaporized material onto a surface to create gems that consumers cannot tell apart from mined diamonds. In 2020 the company sued competitors in the synthetic diamond industry, accusing them of infringing its patents for producing stones in the lab. The other major U.S. synthetic diamond producer, Diamond Foundry, is looking for future growth outside of the jewelry industry. Chief executive Martin Rosaisen told the Financial Times in August that he was looking to supply diamond wafers to the semiconductor industry as production costs continued to fall.

Prices for rough diamonds, meanwhile, fell in 2023 as many post-pandemic consumers turned their backs on luxury goods, following two years of record sales for precious stones. According to the Zimnisky Global Rough Diamond Index, prices are the lowest in a year. According to analysts, prices fell as post-pandemic consumers began eating out, traveling and spending money on experiences rather than luxury goods. “Diamonds are a completely consumer-driven market,” explains Edan Golan, independent diamond analyst. Buyer demand for diamond jewelry affects rough diamond prices and, to some extent, retail prices. Retailers fueled consumer demand by pouring hundreds of millions of dollars into advertising. Industry analysts expect a jump in retail sales during the winter holidays and into early 2024. The winter months are peak engagements, and Christmas and Valentine's Day are typically lucrative periods for jewelry companies. While this may lead to a slight uptick in rough diamond prices, “overall we will see a year-on-year drop in sales over the holiday period,” predicts David Johnson, a spokesman for De Beers.

Source: www.kathimerini.com.cy

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