[imagesource:picryl]

It was nice while it lasted, but with a new generation that doesn’t see the ‘value’ in gemstones, diamonds may turn out not to be forever.

De Beers, who has always controlled diamond prices, has allowed sellers to ignore restrictions set by the diamond empire for the first time.

Previously, diamond markets were closely guarded over and expected to take all their allocations at a price set by De Beers, but with the price in freefall, things are changing – and it’s Genz’s fault.

The concessions are the latest in a series of frantic attempts by the industry to reverse this year’s drop in diamond prices, which has been worsened by slower consumer demand which has left buyers with bloated stocks. De Beers’ main competitor, Russian miner Alrosa PJSC, has already cancelled all sales for the next two months, while the market in India — the leading cutting and trading centre — has frozen imports.

De Beers’ recent sale saw buyers from India and Antwerp buying just $80 million (R1,4 billion) of uncut gems, a significant increase from the $500 million (R9,3 billion) expected. This is the lowest sales since the early days of the pandemic in 2016.

But it’s the speed and severity at which prices dropped that left many surprised.

Strangely enough, the diamond industry was one of the few winners during the pandemic, but the demand has cooled somewhat as economies opened up. This was made worse by a plunge in the US economy and a real estate crisis in China. The lab-grown diamond industry also experienced significant gains in key markets. The industry’s response was to choke off supply in an almost brutal way, and it seems to be working for now.

Falling diamond prices reflect weakness in the luxury sector as well. LVMH (Louis Vuitton Moet Hennessy) has lost over $100 billion (R1,8 billion) since mid-April. Richemont also reported a surprise decline due to falling luxury watch spending among high-end consumers.

Lab-grown diamonds are gaining popularity in some markets, but it seems Gen Z doesn’t value diamonds the same as previous generations. Whether diamonds will still be a girl’s best friend as we head deeper into the 21st century is a question De Beers will be asking themselves more and more in the next few years.

[source:fortune]