Diamond market ‘still missing a spark:’ Zimnisky 

After two difficult years marked by falling prices, where does global demand for diamonds go from here? Independent diamond analyst and consultant Paul Zimnisky weighs in. 

What’s the general outlook for the diamond industry this year? Do you see a recovery or consistent challenges? 

We could see a modest recovery in natural diamond demand and prices in 2025. Given the difficult conditions the last two years, the comparative base has come down quite a bit.  

All it would take is a stable U.S. and a slightly better China to yield a moderate recovery as industry inventories improve throughout the year.  

This said, through early February, natural rough diamond prices are down 1-2% year-to-date, according to the Zimnisky Global Rough Diamond Price Index – as the market is still missing a spark.  

Can you break it down by region? 

The U.S. is still by far the largest consumer of diamonds in the world at about 55% of value sold. Uncoincidentally, the U.S. is also where lab-grown diamonds have made their biggest inroads. So, while the U.S. market as a whole has been stable, there has not been enough growth the last couple of years to offset the share that natural diamonds have lost to lab-grown.  

In general, Europe has been weaker than North America, and China has yet to show signs of a meaningful recovery following an extremely difficult 2024.  

 
How important is Chinese demand and where does it stand?  

For the last two decades, China was the diamond industry’s fastest growing large market, going from essentially a share of zero in 2000 to pushing 20% of global diamond demand in the years prior to the pandemic.  

Right now, China is dealing with a very precarious residential property market which is ostensibly related to years of overinvestment and overleverage in real estate – which itself relates to the way that the personal finance system is structured in the Chinese Communist Party.  

All of this is being compounded by more secular demographic challenges in China, i.e. a rapidly aging population. So, this has had a profound impact on consumer sentiment in China, especially as it pertains to the luxury market. This said, I don’t think the diamond industry should give up on China – it’s too big, it’s too important. 

 
And India? What are the key drivers there for the polishing industry? 

India is still the major player in the diamond industry’s midstream, accounting for upwards of 85% of global diamond manufacturing, i.e. cutting and polishing. However, India is also becoming a significant consumer of diamonds – having likely taken over China last year as the world’s second largest buyer of diamond jewelry. 

The Indian economy is the fastest growing large economy in the world right now and its likely to be a big driver of luxury demand in the years ahead. Of note, Indian consumers tend to have a strong preference for natural diamond jewelry (rather than lab-grown) and other jewelry made with inherently valuable materials, as culturally they see jewelry as a store of value.  

 
What’s the state of lab-grown vs natural? Is there pushback from consumers to buy natural, or does the low lab-grown price rule?  

The price of lab-grown, or man-made diamonds, has consistently trended down over the last decade, down 90%-plus since 2015, according to my analysis. This directly relates to improvements in production technology and the rapid production volume growth. 

Lab-grown diamond production for use in jewelry has doubled every two years since 2015, according to my analysis. This dynamic reminds me of other modern manufactured products such as flat panel TVs or LED lightbulbs – in terms of advancements in production technologies leading to lower and lower prices.  

So, the obvious question becomes, will the ever-growing price disparity between natural and manufactured diamonds impact how consumers view the products in terms of them being interchangeable? In my opinion, this will depend on how well the natural diamond industry does marketing and communicating its product to consumers in the years ahead – because at the end of the day, diamonds are a luxury product and need to be sold as such.  

 
What’s happening with De Beers and Anglo taking an impairment charge?  

In early-February, Anglo American, De Beers’ parent, noted that it will be reviewing the book value of De Beers. Last year, Anglo took a $1.6-billion impairment on the company, taking the carrying value down to $7.6 billion, so this would be on top of that.  

Anglo publicly put De Beers up for sale last year as part of a larger company-wide restructuring, and it seems like the market is valuing De Beers at significantly less than $7.6 billion, so this isn’t really a surprise to me.  

 
Is Anglo likely to sell De Beers this year with that knock?  

At this point, I think the most likely outcome is a spinout. De Beers is a difficult business to sell given the complex business structure, i.e. it’s vertically integrated and has intertwined joint ventures with government partners, in addition, the larger diamond market is in a lull at the moment.  

I don’t think Anglo shareholders are willing to give it away on the cheap, so a spinout seems most likely to me, especially if Anglo has its sights on exiting the business this year. As a standalone company, there would be an opportunity for investors to buy directly into what is essentially a whole luxury category – and diamonds historically are one of the most prominent and important categories within luxury.  

So, De Beers really is a unique business in that way. There are good years ahead if proper investments are made, especially in terms of marketing and differentiating the natural diamond product from the man-made version. Historically, the diamond business has been resilient. It has stayed relevant despite numerous challenges in the past. It’s a special industry.