China is the world’s largest consumer of diamonds and it seems that there is a shift in demand as the regular buyers are purchasing more smaller diamonds. The investors in China that are hungry for very rare diamonds such as blue or pink are pushing the regular buyers to go downstream. Find out more about the shifting demand of the China market by reading further.
Many times if there is a colored diamond up for auction at, for example Christie’s or Sotheby’s, a Chinese investor will be bidding a high diamond price to gain that investment item. High-end markets such as diamonds have gained a lot of investment money because investors are looking for high returns as the global trend of low interest rates slowly disappears. The result is that Chinese buyers are turning to the market for smaller diamonds and more affordable gems.
As the prices for rare and larger diamonds are reaching into the millions the average Chinese buyer is pushed out of the high-end market game. As there is more interest for smaller diamonds the prices for this selection has risen, putting pressure on the other countries where engagement ring seekers now need to pay more – like in Japan for example.
Diamonds being 70% of the worldwide jewelry sales and China being the largest consumer, this shift of demand could be leading to higher prices for smaller stones soon.
In addition to the shift in interest for smaller diamonds, Chinese consumers are aiming for lower grade diamonds too. These were traditionally very popular in the neighboring countries as Japan. Due to this change, Japanese consumers cannot keep up with the institutional money in the high-end market as economic growth slows and the government’s anti-corruption campaign is believed to have squeezed demand.
Normally the consumers in Japan choose the relatively affordable diamonds that are 0.15- 0.25 carat and F or G color grade. Followed by a VVS1 or VVS2 clarity. A Tokyo-based jeweler representative of Kuwayama comments that they now need to compete with Chinese buyers who used to go for more expensive diamonds.
The diamond prices for the smaller diamonds segment
When demand for a certain item rises the price will rise along with it and that is why the prices of the 0.20 carat SI or better (benchmark for small diamonds) has now risen to 60.000 – 80.000 yen per carat. This is nearly a 10% gain compared to the past year.
When is a diamond an investment asset?
When looking at the top end of the diamond market, the diamond prices for large and rare diamonds have been rising as for the inflow of money of investors. But to have value as an investment, the diamond generally needs to be at least 3 carats next to excellent color, clarity, and cut proportions.
Are you interested in invest in diamonds? Feel free to consult with one of our experts to see what your options are.