LGD grower implodes

[Garry H (Cut Nut)]

A large Indian CVD grower has closed their doors.
It is time for this market to wake up and realize that is a costume jewel business.
The volumes will only move once the prices are attractive to consumers.
I have on very authorative wholesale costs in a direct quote:
"After factoring in the yield and producer margins, we would end with a floor polished price of about $65-70 for smaller stones and about $120-125 for larger stones. These might come down in the future as technology improves..."
So anyone paying more than $500 per carat today might want to factor this into their purchasing decision?

Surat diamantaires Suffers Rs 500 Cr Losses as Lab-Grown Diamond Company Goes Bankrupt - The Blunt Times

several prominent diamantaires have incurred massive Rs 500 Cr losses following the bankruptcy of a leading lab-grown diamond company in Surat

theblunttimes.in

 

[Pomelo]

A large Indian CVD grower has closed their doors.
It is time for this market to wake up and realize that is a costume jewel business.
The volumes will only move once the prices are attractive to consumers.
I have on very authorative wholesale costs in a direct quote:
"After factoring in the yield and producer margins, we would end with a floor polished price of about $65-70 for smaller stones and about $120-125 for larger stones. These might come down in the future as technology improves..."
So anyone paying more than $500 per carat today might want to factor this into their purchasing decision?

Surat diamantaires Suffers Rs 500 Cr Losses as Lab-Grown Diamond Company Goes Bankrupt - The Blunt Times

several prominent diamantaires have incurred massive Rs 500 Cr losses following the bankruptcy of a leading lab-grown diamond company in Surat

theblunttimes.in

Thanks Garry, this is an interesting perspective.

I’ve been watching LGDs from the sidelines and have to admit, what stopped me buying is when a friend whose family owns a jewellery business asked whether I’d be interested in starting a LGD business with him (this was 5-6 years ago).

They had access to LGDs in India and he mentioned margins of 90%+ for finished pieces.

That was when I knew it was going to be a race to the bottom for prices, and would become a highly commoditised market - so I decided not to get involved.

(For transparency, I don’t work in the trade but was thinking about starting a moissanite / LGD side hustle in the mid-2010s when the technology was becoming more widespread).

At those low price points, do you think LGDs will continue to be certified?

 

[Garry H (Cut Nut)]

I’ve been watching LGDs from the sidelines and have to admit, what stopped me buying is when a friend whose family owns a jewellery business asked whether I’d be interested in starting a LGD business with him (this was 5-6 years ago).
At those low price points, do you think LGDs will continue to be certified?

Eventually no and yes.
No once all the goods become high quality.
And yes when there are still grainy hazy stones being produced - as the labs will finally be forced to grade and declare transparency - about 3 decades after they should have as that is as bad as the current cut grading methods.

 

[DejaWiz]

Didn't the Indian government throw out a bunch of subsidy money over the last couple/few years so that more and more LGD growers could rapidly come online to meet the shifting LGD demand because of the increasing demand for LGD as well as NGD supply constraints due to both the pandemic and the sanctions on Russia for their aggression? Can't help but think that it was government "just throw money at it" short-sightedness while ignoring the long term effects of suddenly having a huge increase of growers popping up...and a majority of these newcomers probably using questionable equipment, questionable growth methodology, and questionable QA while flooding the market with a "quick and cheap" approach, tanking prices and forcing all other growers to tank their pricing and sacrifice QA in order to try and keep their doors open.

 

[Garry H (Cut Nut)]

Didn't the Indian government throw out a bunch of subsidy money over the last couple/few years so that more and more LGD growers could rapidly come online to meet the shifting LGD demand because of the increasing demand for LGD as well as NGD supply constraints due to both the pandemic and the sanctions on Russia for their aggression? Can't help but think that it was government "just throw money at it" short-sightedness while ignoring the long term effects of suddenly having a huge increase of growers popping up...and a majority of these newcomers probably using questionable equipment, questionable growth methodology, and questionable QA while flooding the market with a "quick and cheap" approach, tanking prices and forcing all other growers to tank their pricing and sacrifice QA in order to try and keep their doors open.

Yes yes yes yes and yes DJ

 

[Karl_K]

When any government starts throwing money around the scammers come running.
It sounds more like a scammer took the money + some from other companies/people and ran with it, than the LGD market being the real issue.

 

[Ibrakeforpossums]

Oh god, more suicides in Surat.

 

[Garry H (Cut Nut)]

When any government starts throwing money around the scammers come running.
It sounds more like a scammer took the money + some from other companies/people and ran with it, than the LGD market being the real issue.

You know where the prices are now and where they are headed Karl. The NO return on investment and current and growing (no pun) oversupply means the only way out is to do the Swarovski model.
The sadder part is the 72% of US retailer's who have invested in grown diamond inventory and their clients who all feel or will soon feel totally ripped off!
De Beers pitching Lightbox as the underlying base price $800 per carat seem to have been way over the real retail benchmark.

 

[Daisys and Diamonds]

You know where the prices are now and where they are headed Karl. The NO return on investment and current and growing (no pun) oversupply means the only way out is to do the Swarovski model.
The sadder part is the 72% of US retailer's who have invested in grown diamond inventory and their clients who all feel or will soon feel totally ripped off!
De Beers pitching Lightbox as the underlying base price $800 per carat seem to have been way over the real retail benchmark.

what do you refer as the Swarovski model ?
i really hate walking ito their store in Wellington (i like the orniments not the jewrey (they are so pushy and false in there and its not nearly as well made as it used to be when it was sold in jewlery stores)
i want to buy a lab grown diamond one day to replace a lesser quality coloured stone

 

[Garry H (Cut Nut)]

The retail stores are about 50% franchised, so thats a different thing.
A head of Alrosa diamond company once said "we treat diamonds like glass and Swaorvski treat glass like diamonds"

 

[Alexiszoe]

You know where the prices are now and where they are headed Karl. The NO return on investment and current and growing (no pun) oversupply means the only way out is to do the Swarovski model.
The sadder part is the 72% of US retailer's who have invested in grown diamond inventory and their clients who all feel or will soon feel totally ripped off!
De Beers pitching Lightbox as the underlying base price $800 per carat seem to have been way over the real retail benchmark.

Can you explain how the Swarovski model works and how that could look like for LGD?

 

[Garry H (Cut Nut)]

Can you explain how the Swarovski model works and how that could look like for LGD?

https://www.swarovski.com/en-US/p-M5665534/Intimate-ear-cuffs-Diamond-TCW-1-10-carat-14K-white-gold/?variantID=5665534

 

[oncrutchesrightnow]

@Daisys and Diamonds Pretty sure the “Swarovski model” means “make pretty cuts and designs.” As opposed to the Prescriptivist Model, which means “everybody make the same boring style“ and tell consumers to buy the most expensive copy they can afford.

 

[calico]

So should for those of us looking now for high quality grown and ideal cut stones hold off on purchasing if we can? I thought I was getting a good deal given the stone was priced more than double on a couple of other jewelers sites, but it is still $650 per carat for an ideal cut, hpht grown, H&A-noted diamond. I haven’t received it yet but can return it, should I consider that? I am very new to LGD and still learning what other than cut/angles I need to look for, but thought I found a great one.

 

[Rfisher]

This is so odd to read.

One can say PS advertising vendors with lab grown diamonds in stock aren’t the 72% of US retailers being discussed.

But still so odd to read here. It really hadn’t been that long that ‘awaited’ certain favorite vendors started carrying them.

 

[ItsMainelyYou]

I don't think one grower closing means too much, honestly.
Not if you ask Millenials or GenZ.

The trend for young couples and Mill/GenZ is buying LGD, there is absolutely no reason to buy EG diamonds for them. The cache of EG doesn't hold sway.
The share of LG has doubled year over year for last two years. Some of the predictions say that LG will account for 50% of all diamond sales in US in 2025.
Millennials and Gen Z want lab grown. Young celebrities are proudly showing off their LGs.
I thought this was interesting.

When Will Lab-Grown Diamond Sales Surpass Naturals? A Forecast

Lab-grown diamond sales will eventually outpace naturals. The question is not if but when this will happen. A diamond analytics forecast.

www.edahngolan.com

Survey: Gen-Z Consumers “Embracing Lab-Grown Diamonds” - Israeli Diamond Industry

A new survey conducted by MVI Marketing (the MVEye) and quoted by InStore Magazine reaches some interesting conclusions about purchasing trends

en.israelidiamond.co.il

Sparkling Shift: China's Diamond Market Evolution

China’s diamond market is the world’s 2nd largest, valued at approximately USD 8.8 billion in 2022. The country produces half of the world's lab-grown diamonds.

daxueconsulting.com

The 'Carat Freedom' Generation: Lab-Grown Diamonds Woo China’s Gen Z

A diamond isn’t forever. In China, domestic lab-grown diamond brands are providing alternatives to match Gen Z’s expectations for value and ethics.

jingdaily.com

There are endless articles, many talking about China's very large market of Millennials/Genz who also are beginning to embrace the LG trend.
The future is here.

 

[DejaWiz]

I don't think one grower closing means too much, honestly.
Not if you ask Millenials or GenZ.

The trend for young couples and Mill/GenZ is buying LGD, there is absolutely no reason to buy EG diamonds for them. The cache of EG doesn't hold sway.
The share of LG has doubled year over year for last two years. Some of the predictions say that LG will account for 50% of all diamond sales in US in 2025.
Millennials and Gen Z want lab grown. Young celebrities are proudly showing off their LGs.
I thought this was interesting.

When Will Lab-Grown Diamond Sales Surpass Naturals? A Forecast

Lab-grown diamond sales will eventually outpace naturals. The question is not if but when this will happen. A diamond analytics forecast.

www.edahngolan.com

Survey: Gen-Z Consumers “Embracing Lab-Grown Diamonds” - Israeli Diamond Industry

A new survey conducted by MVI Marketing (the MVEye) and quoted by InStore Magazine reaches some interesting conclusions about purchasing trends

en.israelidiamond.co.il

Sparkling Shift: China's Diamond Market Evolution

China’s diamond market is the world’s 2nd largest, valued at approximately USD 8.8 billion in 2022. The country produces half of the world's lab-grown diamonds.

daxueconsulting.com

The 'Carat Freedom' Generation: Lab-Grown Diamonds Woo China’s Gen Z

A diamond isn’t forever. In China, domestic lab-grown diamond brands are providing alternatives to match Gen Z’s expectations for value and ethics.

jingdaily.com

There are endless articles, many talking about China's very large market of Millennials/Genz who also are beginning to embrace the LG trend.
The future is here.

My concern is the potential for a domino effect...this is the first major grower to fall because of a kneejerk reaction a couple of years ago that ended badly. And the first that we know of. In India. If a handful of other countries that have larger growers followed India's lead with the government subsidies that ultimately led to this, then who's next and how many larger growers will suffer the same fate in numerous countries? There is so little news (or truth) that even comes out of many countries that it could blindside the global industry in short order.

 

[Garry H (Cut Nut)]

So should for those of us looking now for high quality grown and ideal cut stones hold off on purchasing if we can? I thought I was getting a good deal given the stone was priced more than double on a couple of other jewelers sites, but it is still $650 per carat for an ideal cut, hpht grown, H&A-noted diamond. I haven’t received it yet but can return it, should I consider that? I am very new to LGD and still learning what other than cut/angles I need to look for, but thought I found a great one.

Thats a pretty good deal - I expect it will always be hard for consumers to get under $400 pct in a few years time.

 

[Garry H (Cut Nut)]

My concern is the potential for a domino effect...this is the first major grower to fall because of a kneejerk reaction a couple of years ago that ended badly. And the first that we know of. In India. If a handful of other countries that have larger growers followed India's lead with the government subsidies that ultimately led to this, then who's next and how many larger growers will suffer the same fate in numerous countries? There is so little news (or truth) that even comes out of many countries that it could blindside the global industry in short order.

It was a scam to get investors money and buy US realestate!

 

[Alexiszoe]

@Garry H (Cut Nut) , do you know why certain cuts are significantly more expensive in the LGD world?

I have been looking at 5+ carats asschers and not only is it impossible to find nice looking ones, they are also significantly more expensive ($1000 to $3000 per carat) than other cuts of the same carat size.

 

[Garry H (Cut Nut)]

@Garry H (Cut Nut) , do you know why certain cuts are significantly more expensive in the LGD world?

I have been looking at 5+ carats asschers and not only is it impossible to find nice looking ones, they are also significantly more expensive ($1000 to $3000 per carat) than other cuts of the same carat size.

That is because they are deeper. That means growing a thicker CVD slab.
Most CVD diamond are shallower with larger tables

 

[Daisys and Diamonds]

every time i have seen this thread title
i imangine some terrible industrail accident

 

[DejaWiz]

It was a scam to get investors money and buy US realestate!

Well, there's plenty of dirt cheap real estate here in the US, especially in dying major cities like Detroit and Cleveland.

 

[lburn]

I purchased a 5 carat lab grown and am so happy with it. Even though it was not earth created, the amount of money saved is astounding. I have several diamonds that are mined and am so glad that now I can get a genuine diamond upgrade at a more reasonable cost. If technology can create me a beautiful diamond why not embrace it? I certainly can appreciate everyone’s point of view, but personally I would rather take the money saved and use it elsewhere.

 

[pammbw]

I purchased a 5 carat lab grown and am so happy with it. Even though it was not earth created, the amount of money saved is astounding. I have several diamonds that are mined and am so glad that now I can get a genuine diamond upgrade at a more reasonable cost. If technology can create me a beautiful diamond why not embrace it? I certainly can appreciate everyone’s point of view, but personally I would rather take the money saved and use it elsewhere.

I agree with you. I hear so much about lab diamonds having no trade in or resale value for consumers so retailers don’t want to sell them and have upset customers down the road. I would buy the lab diamond, and take the cash I saved and invest it in a steady 8% return investment and in 10 or 20 years I’ll have way more money than I could have ever sold that natural diamond for, and I still have my beautiful jewelry!!

As far as the grower in India going under, that’s unfortunate but that’s the after effect of an over saturated market. A “gold rush” so to speak. I definitely don’t think it spells doom for the LGD industry- on the contrary, it’s a bit Darwinian but the strongest will survive and make the business stronger. Consumer demand for lgd is definitely there- the wholesale and manufacturing side of things just need to figure themselves out. The fighting between natural vs. lab doesn’t help anyone

 

[pammbw]

My concern is the potential for a domino effect...this is the first major grower to fall because of a kneejerk reaction a couple of years ago that ended badly. And the first that we know of. In India. If a handful of other countries that have larger growers followed India's lead with the government subsidies that ultimately led to this, then who's next and how many larger growers will suffer the same fate in numerous countries? There is so little news (or truth) that even comes out of many countries that it could blindside the global industry in short order.

India is doing the same thing with cultured freshwater pearls. Anyone that can dig a pond in their backyard is now culturing pearls in India. It’s going to wreak havoc on that industry too.

 

[AprilBaby]

When any government starts throwing money around the scammers come running.
It sounds more like a scammer took the money + some from other companies/people and ran with it, than the LGD market being the real issue.

Agreed! More of a greed problem with the owner than a diamond problem.

 

[Lisa Loves Shiny]

The fighting between natural vs. lab doesn’t help anyone

I agree with everything you said and highlight one portion to say thankfully on PS there is room for us to love both. There are strong opinions regarding which to choose which is fine and I have no judgement on which diamond someone chooses. I am over the moon with my lab diamond purchases. It doesn't make me love my lab diamonds any less if someone considers them costume jewelry due to the cost to produce them. They are beautiful diamonds and it reminds me of the quote "Would a rose by any other name smell as sweet?" If they become even less expensive then I see a 4 carat asscher cut in my future.

 

[yssie]

India is doing the same thing with cultured freshwater pearls. Anyone that can dig a pond in their backyard is now culturing pearls in India. It’s going to wreak havoc on that industry too.

But with oysters - because they’re alive - the number of things that can potentially go wrong is infinitely larger and can’t be rectified simply by buying better machines... IMO the only parts of the pearl industry that will be affected are the mostly-non-exported dregs at the bottom of the barrel. China is so far ahead on quality for rock bottom price - they own the international FW market.

 

[Garry H (Cut Nut)]

Growing fresh water pearls is a shocking misuse of water!