Diamonds may be a girl’s best friend but they’re your portfolio’s worst nightmare. Prices have fallen to their lowest level this century!” tweeted Barchart, a leading provider of market data and services to the global financial, media, and commodity industries posting the ‘Diamond Price Index’ by BofA Global Investment strategy showing the prices have fallen to their lowest level this century. The free fall in diamond prices is continuing since 2022 with diamond prices falling from its peak to more than 35-40.
Surat—The Epicenter of the Crisis
Surat, the world’s largest hub for polished diamond manufacturing, has been reeling under a severe recession for the last two years. The dwindling demand for polished diamonds in key markets like the United States and China—the latter being the largest buyer of flawless diamonds—has significantly impacted Surat’s economy.
Other contributing factors include geopolitical tensions, such as the Russia-Ukraine war and the ongoing Israel-Hamas conflict, which have disrupted global supply chains and dampened consumer sentiment. Over 30% of small diamond cutting and polishing units in Surat remain shuttered since the Diwali vacation. Larger diamond units have reduced operations, struggling to adapt to the changing market dynamics.
VP Of DWUG Expresses His Concern
Bhavesh Tank, Vice-President of the Diamond Workers’ Union Gujarat (DWUG), expressed concern: “The demand for diamonds is at an all-time low, leaving small units with unsold stock. Many diamond artisans are under severe financial stress, leading to tragic cases of suicides.”
Recognizing the crisis, the Gem & Jewellery Export Promotion Council (GJEPC) collaborated with the Bharat Diamond Bourse (BDB) and Mumbai Diamond Merchants’ Association (MDMA) to organize a seminar on September 30, 2024. The seminar focused on the “Key Pricing Challenges Facing the Diamond Industry” and introduced the DiaSense Diamond Pricing Index, presented by its founder and CEO, Pratik Shah.
The event brought together industry experts such as Anoop Mehta, President, BDB and Prakash Sanghavi, President, MDMA to discuss current issues and explore innovative solutions.
Participants discussed the significant impact of current pricing challenges on the diamond industry, including their implications for market stability and growth. The seminar highlighted the limitations of existing price indices in accurately reflecting market realities, highlighting the need for more reliable and representative benchmarks.
Pratik Shah said there was an urgent need to have an alternate price index because of the limitations of the existing price indices such as the lack of transparency, monopoly, and holistic industry feedback.
Experts explored innovative approaches to develop a pricing model that is more accurate, transparent, and reflective of market dynamics. The seminar underlined the importance of collaborative efforts among industry stakeholders to enhance and standardise pricing practices across the global diamond market.
Export and Import Declines
India’s overall gross exports of cut and polished diamonds from April to November 2024 stood at $8,980.2 million (₹75,183.34 crores), marking an 18.88% decline compared to the same period in 2023. Similarly, gross imports of rough diamonds during this period fell by 20.97% to $6,960.40 million (₹58,223.36 crores).
These declines highlight the ongoing struggles of the diamond industry amid a shifting global economic landscape.
Generational Shifts and New Consumer Trends
As Generation Z becomes a prominent customer base for fine jewelry, shifting preferences are reshaping the industry. Unlike their predecessors, Gen Z consumers prioritize ethical sourcing, sustainability, and innovative retail experiences.
A Euromonitor survey revealed that 58% of Gen Zers purchased luxury apparel and accessories three times last year, compared to 41% of baby boomers. These younger consumers are increasingly drawn to digital platforms, with online diamond jewelry purchases expected to grow at a compound annual growth rate (CAGR) of 9-12% between 2019 and 2025, according to McKinsey research.
Gen Z’s emphasis on socially conscious products has also accelerated the demand for lab-grown diamonds (LGDs). More affordable and ethically sourced, LGDs are rapidly gaining market share, challenging the dominance of natural diamonds. Additionally, microtrends such as upcycling, customizability, and self-purchasing are influencing jewelry-buying behavior. Antique and vintage diamonds are also seeing a surge in popularity as consumers seek unique and sustainable options.
Additional microtrends include upcycling and customizability. Further, consumers are increasingly purchasing fine jewelry for themselves, rather than waiting for special events such as engagements and marriage. Consumers are also mixing and matching fine jewelry with casual apparel and purchasing antique or vintage diamonds, contributing to the uptake of both new and used jewelry products.
