There is already a strong narrative about Lab-grown diamonds that appeals to millennials – Eco-friendly, Conflict-free, Origin-guaranteed, Responsibly-sourced, Socially-conscious, Ethical stones symbolizing pure love. Increasing awareness, acceptance and adoption of Lab-grown diamonds by both consumers and jewelers alike in the past 2 – 3 years has accelerated the Lab-grown diamond sector. However, a very important element that sets Lab-grown diamonds apart from Mined diamonds is Price-point. According to an industry analyst, the price difference between Lab-grown diamonds and Mined diamonds have further widened in the past 12 months.
Lab-grown diamonds were always cheaper than Mined diamonds in the range of 25% to even up to 80% for some larger fancy colored high-quality stones. In the past couple of years, there were doubts being raised whether Lab-grown diamonds are really cheap as portrayed. A latest analysis from NY-based diamond industry analyst Paul Zimnisky shows that prices of Lab-grown diamonds have drastically reduced in the last year and is around 30 – 40% cheaper than mined diamonds, compared with price differentials of 11 – 20% last year. This means that there has been a 71% YoY price differential widening between Lab-grown diamonds and Mined diamonds.
Drastic acceleration of technology, major improvements in economics of manufacturing Lab-grown diamonds and supply side rise with more players and production getting added, are some of the key reasons for the fall in Lab-grown diamond prices. Singapore-based IIa Technologies had opened a massive 200,000 Sq. Ft. diamond-growing greenhouse around 3 years back, with the capacity to grow up to 300,000 carats of gem-quality diamonds annually. Since then, numerous small and some big players have entered the Lab-grown diamond production space.
Production of gem-quality Lab-grown diamonds are about to touch an estimated 5 million carats, representing less than 10% of global gem-quality diamonds production. This is a phenomenal rise from just around 3 years back when only around 200,000 carats of Lab-grown diamonds were produced. According to Zimnisky analysis, industrial grade and near-gem quality of Lab-grown diamonds though are produced in hundreds of millions and billions carats every year.
As mentioned in another media source, global rough diamond production is likely to halve and prices of mined diamonds are set to increase further, with a forecasted increase of 3-4% in 2018 itself, primarily due to output decline by Alrosa and Rio Tinto. In such a scenario and considering the continuing trend of falling prices of Lab-grown diamonds, the price gap will only increase further resulting in Lab-grown diamonds become even more attractive than Mined diamonds.