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cultured diamonds, which have the same composition as natural diamonds and are difficult to distinguish with the naked eye, were once highly sought after by capital. however, after the hype, with the change in market supply and demand, the price of cultured diamonds has now fallen to about 1/20 of that of natural diamonds.

securities times e-company reporter visited henan, an important production and sales area for cultured diamonds, and learned that the current price of cultured diamond rough has dropped from the high point of us$100 per carat to about us$15. the price of a one-carat loose diamond with an appraisal certificate at the terminal is only more than 1,000 yuan. "gold is more expensive than diamonds" has become a common perception among cultured diamond jewelry sellers, so the market no longer sells cultured diamond jewelry below 50 points.

under the weak price, the enthusiasm for cultured diamonds from raw material production to terminal layout has cooled down. industry insiders believe that the cultured diamond market still has development potential, but the industry access mechanism and identification rules still need to be improved as soon as possible.

thousand-carat diamond

"a classic six-claw one-carat diamond ring with d color can be taken away for about 3,000 yuan. if the workmanship is complicated or the color is better, it will be only about 4,000 yuan." in a cultured diamond store in zhengzhou, henan province, the staff introduced the prices of several display samples in turn. the store's diamond jewelry ranges from 50 points to two or three carats, and most of the prices do not exceed 10,000 yuan.

henan, where superhard material production capacity is concentrated, is recognized by the industry as a production base for rough cultured diamonds, and its raw material price advantage is significantly higher than other regions in china. despite this, two years ago in zhengzhou, the price of an ordinary one-carat cultured diamond jewelry was mostly in the range of 10,000 to 20,000 yuan.

"the price two years ago is incomparable to the current price. the price of cultured diamonds has fallen sharply in recent years, and warehouses are obviously overstocked. many peers can no longer do business." a person from the cultured diamond production end told the securities times e-company reporter that the price of cultured diamond roughs reached a high of nearly $100 per carat in early 2022, but due to the accelerated production capacity layout and rapid increase in market supply, the rough price in the third quarter of that year had been "cut in half" to $40 to $50. today, the terminal layout situation is lower than expected, and the source supply continues to be sufficient, and the average market price has dropped to about $15 per carat.

the weakening of raw material prices naturally extended to the terminal.

the above-mentioned store personnel said that currently, a one-carat cultured diamond with good quality is only more than 1,000 yuan, and can also be accompanied by an igi professional certificate for diamond quality. if consumers do not require a certificate, a 50-point diamond is only sold for more than 600 yuan.

"all diamond jewelry needs to be set in 18k gold. the price of gold has skyrocketed this year, but the price of diamonds has fallen. diamonds used to be more expensive than gold, but now gold is more expensive than diamonds." the statement of the person in charge of another cultured diamond store in zhengzhou further confirms the low terminal price of cultured diamonds.

he admitted that currently, the price of a cultured diamond below one carat is only a hundred yuan, but the gold material that supports the diamond costs thousands of yuan, and the cost of identification and certification is several hundred yuan. therefore, due to the low price of diamonds, physical stores no longer sell cultured diamond jewelry below 50 points.

price involution is obvious

during the interview, many sales staff of cultured diamond products lamented that although the industry is in a downturn, it is still very competitive. not only is the price competition fierce in physical stores, but online channels have lower prices because there are no costs such as rent and labor.

on social platforms such as xiaohongshu and douyin, searching for "cultured diamonds" will reveal a multitude of products and stores on sale, with many stores also conducting sales through live broadcasts. cultured diamond jewelry of all sizes, colors, and clarity is dazzling, with prices ranging from a few hundred yuan to tens of thousands of yuan.

“for the same one-carat diamond, the price can vary greatly depending on the clarity, color and cutting process. the products we sell through online channels are different from those sold offline.” the aforementioned physical store staff revealed that although their store also conducts online live sales, they often put low-end and cheap products online to increase sales.

according to reports, the current mainstream manufacturing processes for cultured diamonds include hpht (high-temperature and high-pressure method) and cvd (chemical vapor deposition method). hpht technology is suitable for diamonds with higher color grades, such as de color, but most of them are below 3 carats. cvd technology can produce large carat diamonds.

however, many of the "cultured diamonds" currently on sale online are synthetic silicon carbide, commonly known as moissanite. although they are called cultured diamonds, they are actually different substances. a one-carat moissanite diamond ring, paired with a silver ring, can cost as little as one or two hundred yuan.

the low price of cultured diamonds has also significantly impacted the price of natural diamonds. in recent years, the price of natural diamonds has been falling and is currently in a low range.

weak consumption and pressure on industries

as a major diamond processing site in the world, india's rough diamond imports and polished diamond exports are of great reference value for judging the industry's prosperity.

gjepc data shows that india's imports of cultured rough diamonds in july 2024 were us$86 million, down 26.74% year-on-year; exports of cultured rough diamonds were us$95 million, down 10.21% year-on-year, and the declines are both showing an expanding trend.

at the same time, india's imports of rough natural diamonds in july 2024 were us$913 million, down 17.18% year-on-year, and the year-on-year decline narrowed. the export value of natural rough diamonds was us$908 million, down 22.71% year-on-year, and the decline narrowed compared with the previous month.

the downward trend in industry prosperity will undoubtedly impact the performance of companies related to the industrial chain.

on august 30, dia holdings (301177), which specializes in high-end wedding rings and jewelry, announced that in the context of cyclical adjustments in the industry, the company's chairman zhang guotao and general manager lu yiwen voluntarily proposed to cut their salaries by 50% each starting from august 2024.

the semi-annual report disclosed by the company also showed that the operating income in the first half of this year was 779 million yuan, a decrease of 37.31% over the same period last year; the net profit was 32.8143 million yuan, a decrease of 38.56% over the same period last year. the main reason is that the consumption of diamond-encrusted jewelry continued the trend of 2023, and the demand has not recovered. during the reporting period, the number of corresponding orders decreased by 26.83% year-on-year, and the average customer unit price decreased by 12.01% year-on-year (excluding other businesses).

in the field of cultured diamonds, huifeng diamond (839725), whose main products involve cvd cultured diamonds, achieved operating income of 116 million yuan in the first half of 2024, a decrease of 56.67% from the same period last year; non-net profit was 2.3256 million yuan, a decrease of 93.58% from the same period last year. according to disclosures, the book value of huifeng diamond's inventory at the end of the first half of the year was 334 million yuan, an increase of 34.37% from the beginning of the period. one of the reasons is that due to unfavorable factors such as the continuous adjustment of the market environment and the continuous decline of market prices, the company has not vigorously promoted the sales of cultured diamond products, resulting in an increase in cultured diamond inventory.

china north industries group corporation (000519) also saw a decline in both revenue and net profit in the first half of the year, with a net profit of 44.5856 million yuan, a year-on-year decline of 57.66%. huanghe cyclone (600172) achieved operating income of 650 million yuan in the first half of 2024, a decrease of 21.48% over the same period last year; its net profit loss reached 248 million yuan.

upstream and downstream expansion cooling

since 2021, the concept of cultured diamonds has been favored by the capital market, and has also attracted upstream and downstream companies in the industry chain to expand their layout. however, as the market cools down, early investment projects have begun to slow down or even stop.

just on august 29, mankalong (300945) disclosed an announcement that it plans to adjust the internal investment structure of the company's fundraising investment project "'mucan' brand and creative promotion project", and adjust the date for the project to reach the scheduled usable state from july 31, 2026 to december 31, 2027.

mucan is a brand established by mancaron in 2022 to promote the cultured diamond business. as for the reason for this adjustment, the company also stated that the market penetration rate of cultured diamonds in my country has grown slowly and is lower than expected. the company took into account many factors during the construction of the experience store, controlled the investment rhythm, and slowed down the implementation of the fundraising and investment projects, so it was unable to reach the scheduled usable state within the originally planned time.

before the terminal sales layout slowed down, the enthusiasm on the production side had already died down.

in april 2022, huanghe cyclone announced that it planned to raise no less than 800 million yuan and no more than 1.05 billion yuan from the wholly-owned subsidiary of its controlling shareholder huanghe industrial for the cultured diamond industrialization project. the total investment in the project reached 1.244 billion yuan, and it plans to add 500 sets of the world's leading intelligent ultra-large cavity presses, with an annual production capacity of 586,600 carats of high-temperature and high-pressure cultured diamonds.

less than half a year later, the project was terminated due to "many changes in industry conditions, market environment and capital markets."

in 2021, yazhen home furnishing (603389), which mainly produces and sells mid-to-high-end wooden furniture products, invested in the establishment of jiangsu yazhen diamond co., ltd. (hereinafter referred to as "yazhen diamond"), which mainly engages in the manufacture and sale of cvd large-size diamonds, with an initial shareholding of 60%. however, after analysis, research and prudent decision-making, the company reduced its shareholding in the project company to 30% that year.

recently, yazhen home furnishing also disclosed that in 2023, yazhen's diamond production will be 15,100 carats, which has reached the expected annual production target of 7,500 carats. however, the sales of finished products were affected by the yield rate in the processing process and the continued decline in the market sentiment of cultured diamonds, resulting in the sales of finished products falling short of expectations, with operating income of only 1.3571 million yuan and a net loss of 1.7159 million yuan. due to the fierce competition in the cultured diamond market, yazhen diamond's revenue growth is uncertain.

industry mechanisms need to be improved

although the construction of fundraising and investment projects has slowed down, mancaron still has good expectations for the development of the cultured diamond market.

the company mentioned in the announcement that cultured diamonds are favored by end consumers due to their high cost-effectiveness and environmental protection. in addition, cultured diamonds can better meet the self-pleasing, daily and personalized consumption needs of young consumers such as millennials and "generation z" in terms of size, color and clarity. the market consumption potential is gradually realized, and the end-consumer demand for cultured diamonds is growing steadily. wanlian securities research report also judged that the penetration rate of cultured diamonds is expected to increase further in the future.

"the current price of cultured diamonds is only 1/20 of that of natural diamonds, which does have a certain appeal to consumers. however, as an emerging market, the industry's access mechanism and identification rules are not perfect, resulting in relative chaos in the current cultured diamond industry and the market is difficult to develop steadily." during the interview, most industry insiders have good expectations for the future demand for cultured diamonds, but also mentioned that there are still many problems to be solved.

an unnamed industry insider gave an example to the securities times e-company reporter, saying that the current identification standards for cultured diamonds are the same as those for natural diamonds. given the tens of thousands of yuan in natural diamonds, the cost of identification fees of a few hundred yuan is not significant, but given the current market price of cultured diamonds, an identification fee of a hundred yuan is too high and is not conducive to the development of the industry. the cultured diamond industry is also discussing whether it can formulate independent identification rules and channels to reduce costs.

at the just concluded 2024 china cultured diamond industry development seminar, the head of the china jewelry and jade association mentioned that cultured diamonds are an emerging sunrise industry with a huge global market, and it is imperative to establish a standardized system from production and processing, identification and inspection to wholesale and retail. the china jewelry association will accelerate the promotion of projects such as the cultured diamond international trading center to explore strategic paths for the high-quality development of china's cultured diamond industry.

as the cultured diamond market gradually improves, production companies are also seeking diversified development and new growth points.

when asked about the proportion of cultured diamonds and industrial diamonds in the central south diamond production line, china north industries group corporation replied that industrial diamond and cultured diamond production can be converted into each other under certain conditions, the production line is flexible, and central south diamond will dynamically adjust the proportion of the two types of products according to market demand.

when talking about the company's development strategy plan for the next 3 to 5 years, huifeng diamond also stated that the company will continue to focus on diamond micropowder as its main business and expand the application of diamond micropowder in other fields such as aerospace and medicine; at the same time, it will focus on the development and application of functional diamonds in semiconductors, optical films, heat dissipation materials and other fields.