Recently, the CareEdge Ratings, had said, the Cut and Polished Diamond (CPD) exports from India are expected to hit a five-year low in FY24. In the row
The US diamond and jewellery industry is coping with the challenges of rising inflation, the opening of alternate avenues with higher preference for experience-based spending has dampened the customer sentiment in the current fiscal year.
Moreover, the increasing penetration of LGDs from engagement rings to the bridal jewellery segment has resulted in lower demand for CPD in the largest diamond jewellery market, which accounts for over 50% of the diamond jewellery demand.
Economic crisis in China: The second-largest diamond jewellery market has been facing an economic crisis since 2018, followed by its zero-tolerance policy to tackle the Covid outbreak, the collapse of the real estate market, the economic crisis, and the growing preference of its population for experience-based spending and gold jewellery.
Hence, China, which accounts for 10-15% of global diamond demand continued to remain subdued even in FY24. Recovery in diamond jewellery demand requires an overall improvement in the macroeconomic conditions to change customer perspective and increase spending for discretionary products like diamond jewellery.
In light of the above CareEdge Ratings expects no immediate recovery in demand for diamond jewellery from Chinese markets.
Growing acceptance of lab-grown posing additional challenges for CPD! Affordability, sustainability, and similarity are the key factors leading to a surge in demand for LGD, especially in the 1-3 carat segment of natural diamonds.
With essentially the same chemical, optical and physical properties, and crystal structure as natural diamonds, at a fraction of the price has led to a significant double-digit growth of LGDs in the USA. While the price of LGDs has plunged even more steeply than that of natural and is now selling at a bigger discount than ever before, its share in engagement rings and bridal jewellery in the overall diamond jewellery market has increased on a YoY basis.
Despite the consistent dip in prices, India exported LGD of $1.3 billion during 10MFY24; 9% of total CPD exports.
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