A competing game of synthetic diamonds and natural diamonds from a global perspective


Abstract With the continuous penetration of synthetic diamonds into the jeweler's field of vision in recent years, the role of synthetic diamonds, the development path and how to coexist with natural diamonds have caused widespread market attention. Recently, well-known international investment bank Morgan Stanley in a research on the global diamond market...
With the continuous penetration of synthetic diamonds into the jeweler's field of vision in recent years, the role of synthetic diamonds, the development path and how to symbiosis with natural diamonds have caused widespread market attention.
Recently, a well-known international investment bank Morgan Stanley said in a research report on the global diamond market that the emergence of synthetic diamonds is threatening the natural diamond market. The report, "Diamond Games in the Global Perspective: Synthetic and Natural," said that synthetic diamonds are used in the natural diamond market due to various factors such as synthetic diamond production technology, supply and demand in the natural diamond market, and adjustment of consumer attitudes. “Invasion” is most likely to evolve into a result: synthetic diamonds are a useful complement to the diamond market, have a place in the market, grab a limited market share from the natural diamond market, and jointly expand the overall size of the diamond jewelry market.
According to the report, in this case, all types of synthetic diamonds can be tested, but the detection cost of small-particle synthetic diamonds is higher. At the same time, synthetic diamonds will have an impact on the price of small-grain natural diamonds on the market. The pricing impact of large-grain natural diamonds is negligible. In addition, there is an important premise that natural diamond producers need to increase marketing expenditures on an existing basis to cope with the new challenges posed by synthetic diamonds.
Based on the global diamond supply in 2015, the report predicts that by 2020, the global production of small diamonds (less than 0.2 carats, less than 0.5 carats) will be 94 million carats, worth 2.6 billion dollars, the price Decreased by 12% compared to 2015, synthetic diamond production of 14.1 million carats, valued at 200 million US dollars, the price is equivalent to 50% of the price of natural diamonds of the same class; in large grain diamonds (bare stones greater than 0.2 carats, blanks greater than 0.5 carats) The global natural diamond rough production is 45 million carats, worth US$13.6 billion. The price remains basically unchanged from 2015. The output of synthetic diamond is 3.4 million carats, worth 700 million US dollars, and the price is equivalent to 70% of the same level of natural diamonds. %. Synthetic diamonds will account for 15% of the small-grain diamond market share and 7.5% of the large-grain diamond market share.

Synthetic diamonds are welcoming multiple "good"
The development of synthetic diamonds has developed rapidly since 2014, the most important reason being breakthroughs in production technology. Synthetic diamond production mainly uses two major technologies: high temperature and high pressure and chemical vapor deposition technology. However, until the beginning of the 21st century, synthetic diamond production companies with two major technologies could still produce small colored diamonds and could not achieve lasting profit. Large colorless diamonds only began to appear around 2014. Since 2014, technological improvements have greatly contributed to the expansion of synthetic diamonds. More and more large companies can produce large volumes of diamonds from time to time, enough to attract the attention of jewelry retailers. In 2015, the synthetic diamond manufacturer “New Diamond Technology” displayed a 10.02-carat synthetic diamond with a clarity of VS1 and a color E, which was polished with 32.2 carats of rough diamonds. The formation time of the original stone was nearly 300 hours. .
Synthetic diamond detection technology is also mature and constantly optimized. The key to distinguishing between synthetic and natural diamonds is usually to identify the growth patterns of the diamond, such as the way carbon atoms are aggregated. De Beers is one of the most mature companies in the research of synthetic diamond technology. It has established a testing center in Surat, India to provide testing services for diamond traders, and also develops and sells equipment to continuously improve synthetic diamond detection technology. . De Beers' current equipment is capable of automatically screening small round diamonds from 0.01 to 0.2 carats to 360 per hour.
Changes in consumer perceptions and awareness have also created opportunities for the development of the synthetic diamond industry. With the development of Internet technology and the widespread spread of social media, more and more consumers are beginning to understand the chemical and physical properties of synthetic diamonds, and realize that synthetic diamonds are cheaper and comparable in quality compared to natural diamonds. In addition, the “Millennial Generation” that has grown into the main consumer of consumption has not been “brainwashed” by the marketing routine of natural diamonds. Compared with previous generations of consumers, they are more independent in choosing to buy jewelry. Moreover, the study found that Millennials have a strong emotional resonance with renewable, non-polluting jewellery products such as synthetic diamonds, and even are willing to pay extra money to purchase such environmentally friendly products.
From the perspective of the development trend of the natural diamond industry, the increasingly fierce competition has also begun to encourage processors and retailers to find alternatives to natural diamonds. The natural price advantage of synthetic diamonds not only appeals to end consumers, but is also more attractive to processors and retailers looking to increase profit margins. For processors, because natural diamonds and synthetic diamonds have the same processing steps and costs, synthetic diamonds can bring them certain processing orders. At the same time, diamond processing has become the weakest link in the entire diamond industry chain. Businesses urgently need to change the current situation; while the current end market is relatively sluggish, the market share of some small retail brands is being “eating” by larger diamond brands, and they hope to “recover lost ground” through the sale of synthetic diamonds. ", find new profit growth points.
Driven by these factors, the current willingness to invest in the synthetic diamond market is also increasing. The synthetic diamond industry is beginning to gain more track records (production materials, costs, prices, etc.), and the establishment of such a standardized system will help attract bank financing. Previously, synthetic diamonds were mainly based on equity financing.

The challenge cannot be underestimated
Despite the positives, it is no easy task for synthetic diamonds to truly win market recognition or even “replace” natural diamonds.
In fact, as early as the 1970s, General Electric had produced gem-quality synthetic diamonds, but abandoned the attempt to mass production. The reason is that GE believes that although the production of industrial synthetic diamonds is profitable, once mass production is achieved, it will cause a devastating blow to the entire diamond industry: the mystery of diamonds will disappear, and the value of jewelry will not exist. The price will fall to almost zero. Although today's synthetic diamond dispersion production and more accessible synthetic diamond technology may slightly overturn GE's view of the year, but the scale of synthetic diamond production is infinitely expanded, the impact and hidden concerns of the natural diamond market still exist.
In addition, an easily overlooked fact is that the application in the field of jewelry is not the ultimate goal of synthetic diamonds. As other synthetic diamond production technologies advance, some other applications will become more attractive. Since the jewelry market allows certain flaws in synthetic diamonds (colored and contaminated), it is a target market that is easier to achieve. With the development of technology and the rapid growth of the number of pure diamonds, some existing synthetic diamond producers may try to move toward higher-level diamond applications, such as semiconductors, lasers and optical components. It is reported that the market prospect is very broad, and its profit is bigger than the current jewelry market profit - which means that the jewelry industry will not be the main battlefield of synthetic diamonds, but also the supporting role and complementary status of synthetic diamonds relative to natural diamonds. .
The lack of a stable pricing system may be a major problem in the development of the current synthetic diamond industry. Unlike the mature market system established by the natural diamond industry, the synthetic diamond market is more dispersed than the natural diamond market. Currently, no one can accurately provide the market size of gem-quality synthetic diamonds, and each manufacturer has its own distribution channel. At the same time, the division of roles and positioning of producers is also vague: some producers sell rough diamonds, others cut, polish and sell diamonds, while others directly participate in the design and production of their own jewelry. In terms of pricing, some producers price synthetic diamonds based on their own cost base, and some are priced with reference to natural diamond pricing standards. There are also differences in propaganda: some producers place special emphasis on the environmental and social harmony of synthetic diamonds; some producers try to convince consumers only from a price perspective. In other words, the synthetic diamond industry currently lacks a clear industrial chain construction and unified industry structure and information communication, which will certainly bring hidden dangers to the subsequent development of the industry.
The unification of synthetic diamond naming is also a challenge for the development of synthetic diamond industry. The naming problem also reflects to some extent the lack of coordination between synthetic diamond producers and retailers. According to the new standard promulgated by the International Organization for Standardization (ISO) in 2015, natural diamonds refer to “diamonds that are completely natural and form a process without human intervention”. In general, the name “diamond” has no other indications that always refer to “natural diamonds”. Synthetic diamonds are “artificial diamond products with the same chemical composition, crystal structure and physical (optical) properties”. Laboratory cultivation of diamonds or laboratory-made diamonds refers only to the terminology used in synthetic diamonds. Abbreviations such as “laboratory cultivation”, “laboratory diamonds” or “diamond-like diamonds” shall not be used.
At the same time, synthetic diamonds will also encounter the "blocking" of natural diamond production giants such as De Beers, one of the important weapons is patent protection. Although the giant of the natural diamond industry has not been involved in the field of synthetic diamond production, De Beers has been a world leader in the research of synthetic diamond production and detection technology for many years. Currently, there are about 28 families in De Beers. The patent contains 350 individual patents. These patents cover not only the manufacture of synthetic diamonds, but also the types of finished diamonds. Therefore, when challenging synthetic diamond producers, De Beers undoubtedly has greater voice and stronger market position, especially its participation in synthetic diamond testing, which can guarantee the development of the synthetic diamond industry to a certain extent. In a controllable range.

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