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LGD prices to continue dropping,will diverge from naturals

Lab-grown diamonds are a “facet” of the gem industry that has been growing rapidly in recent years.

As a leading global diamond supplier, RDI Diamonds has a unique perspective on increasing lab grown production and its potential for disruption in the diamond industry

Some trends tracked by RDI

Prices will continue dropping

Lab-grown diamond prices have been trending down, and that is almost certain to persist. As production expands apace and competition between laboratories intensifies, the industry can expect to see this reflected in prices of lab-grown stones. They may decrease more slowly than in recent quarters, but will continue declining.

A key element driving down prices is the increasingly global scale of lab-grown diamond production. Countries including China, India, and Israel have invested heavily in the technology and equipment necessary for mass-market production. The resources available to producers outside the United States—such as cheaper energy and labor—are likely to pressure prices even further.

Mined and lab-grown diamond prices will diverge

Initially, jewelry retailers approached pricing lab-grown product similarly to how they were used to price mined diamonds. Perhaps they were overlooking the fundamental differences between grown and mined diamonds (though the two share a chemical structure). Or they did not fully appreciate the extent to which the lab-grown sector would grow and distort pricing.

For some perspective, it helps to step back a bit and see what history can tell us: When moissanite was developed, its pricing structure was never tied to diamonds, and moissanite’s popularity grew independently of the diamond trade.

A divergence in mined and lab-grown diamond prices is inevitable, but at this stage of the game, separating the two could get messy: Retail jewelers who established a convention linking the price of lab-grown stones with that of their mined counterparts are now facing distortions in the market that will challenge them in keeping their customers happy.

Energy usage will be in focus

When lab-grown diamonds came onto the scene, they were often pitched as a “green” or eco-friendly alternative in that they could be created without the need for mines and their associated environmental impact. But in reality it takes an enormous amount of energy to make lab-grown diamonds 10 to 12 times as much as mined diamonds—and it’s typically generated by heavy burning of fossil fuels.

The end result is a product with a carbon footprint much larger than most consumers believed until now. As retailers and shoppers alike become more aware of the environmental impact of lab grown diamonds, there will be a shift in the perceived value of these manufactured stones.

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