Lab-Grown Diamond Update

Posted on August 31, 2022 by Richard B. Drucker, GIA GG, Honorary FGA

Lab-grown diamonds are the focus of the industry and at Gemworld, we continue to get questions on all aspects from identification to pricing. This short update follows the feature article appearing in the last issue (July/August 2022). In mid-July, I watched an industry webinar on lab-grown diamonds, hosted by Rapaport and featuring a panel of experts from marketing to production. Although the panel was pro-LGD based on representation, they did a good job discussing the sides and opinions, even when the fact or opinion was not favoring LGD. Overall, the panel praised the expansion of the LGD market and predicted much more to come. I for one, have been intrigued by the recent talk of shortages as demand has grown so fast. In the webinar it was stated that the shortages are more in melee because now so many manufactures of fashion and bridal are adding lines with all LGD and that is creating an immediate surge in demand to ramp up these lines. According to the panel, this has driven up prices of melee by as much as 70% in the past few years. As my focus on LGD pricing has been for .25 ct and up, all I have witnessed is declines in pricing. Bridal with lab-grown diamonds is becoming very popular. These from a line by Stuller with LGDs. Courtesy of Stuller (stuller.com). Production is something that I have expressed concern over with its negative impact on pricing. Some in our industry still predict that demand will grow faster than supply, suggesting that we are near the bottom and then prices will rise. My opinion has been that factories will continue to grow and outpace demand even if demand does continue at its rapid pace of growth. One panelist was Amish Shah of ALTR Created Diamonds. He stated that India is currently producing 7-8 million carats annually and he predicts this to grow to 25 million in the next few years. I have previously noted that China is also growing at incredible rates and between India and China, my prediction has been that the market may become flooded in a few years. We know that natural diamond producers control the distribution of diamonds to keep prices firm and in past history there were stockpiles when production outpaced demand. With LGD, suppliers continue to grow and release and therefore, prices have continued to de- cline. There was a suggestion on the panel that factories could not ramp up so fast due to a shortage of high-level engineers and scientists to run these machines. However, Shah shot this theory down by explaining that once they start production, adding more growing equipment is easily done and they do not need high level operators. He said their Indian factory is expanding and does not have the need for scientists to run the equipment. There was also some consensus that perhaps we should not be grading these against natural diamonds. Eventually the production is expected to mostly be high quality anyway.They keep get- ting better and more consistent. I totally agree with this. While I have no problem with LGDs being sold (if disclosed properly), when I started pricing, I grouped the grades and continue to do so. As pricing is not based on rarity, why grade them against a product that is priced based on rarity? Some on the panel agreed including Nick Smart of Lightbox (De Beers owned) since they do not grade the diamonds. I am sure the gem labs would not be happy if this is the trend because some labs like IGI and now GIA and GCAL are cultivating business from this new sector. One question that I often get is the price difference for different shapes. With natural diamonds, rough preservation is critical to cost and price and factored with demand, the shape does affect price significantly. With LGD, rough preservation is not much of a factor, so cutting is done mainly to satisfy demand. While round diamonds overall are the most popular and sell for the highest price in general, as expected, prices were close for other shapes. Some companies seemed to charge a slight premium for other shapes but others a slight discount. When discounted, it was a few per- cent to 10% on average. But again, remember that all shapes could be found within the same price range as the rounds.

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