Diamonds: Cycles

How lab-grown stones helped push gems into a slump

Diamonds have no benchmark price, and USGS describes gem prices only as variable by size, type and quality. The natural market has been in a downturn since early 2023, worst for stones of one carat or less. USGS blames weaker luxury demand, inflation, excess inventory and cheaper laboratory-grown diamonds. US gemstone imports fell 44% in value in 2025, to about $11 billion. De Beers historically smoothed cycles by holding back rough in weak years. Synthetic competition now caps prices for smaller stones, so the cycle looks partly like a structural shift.

US price, US import unit value, industrial diamond stones (natural and synthetic)

Super-cycles in diamonds

Diamonds had no public price index for most of the 20th century because De Beers controlled supply and set prices through its sales arm from 1934 to 2004. Since then rough prices have moved with luxury demand in the United States and China and with producer stocking. The latest cycle was a boom to an all-time high in early 2022, followed by the deepest downturn in decades: rough prices fell about 40% from the peak by early 2025 as lab-grown stones, weak China demand and US tariffs hit natural demand. Mine depletion is the main long-run support for prices.

1. 1934-2004

   De Beers ran the world diamond cartel (Tilton and Guzman 2016), buying surplus rough and holding stocks to keep prices stable. Through its Diamond Trading Company it still controlled about half of world production in 2013, even though Alrosa mined more by equivalent production.

   No public price index; Alrosa 26.9% and Anglo American 22.0% of world output in 2013 (Tilton and Guzman 2016).

2. 2021-early 2022

   Post-pandemic spending on jewellery in the US and China, plus restocking by cutters, drove rough to records. India's polished exports more than doubled in the first half of 2021.

   Rough prices hit an all-time high in Q1 2022 (Zimnisky index); US gem imports rose from $24.6 billion (2021) to $28.7 billion (2022) (USGS); India's polished exports were $11.98 billion in January-June 2021, up 106% (Rapaport).

3. 2023-2025

   Luxury demand fell, lab-grown stones took share, China demand halved in 2024 and midstream stocks built up. De Beers and Alrosa suspended sales in late 2023, cut output and wrote down assets. Sanctions on Russian stones stayed in force.

   Zimnisky rough index fell 15% in 2023 and 18% in 2024, about 40% below the 2021-22 high by February 2025; De Beers price index fell a further 12% in 2025 and its realised price was $142/ct; US gem imports fell 44% to $11 billion in 2025 (USGS); India's polished exports hit a two-decade low of $13.3 billion in FY2025.

What drives the cycle

• US and China jewellery demand. The US takes over half of consumer diamond jewellery demand and China's net demand fell an estimated 50% in 2024, so these two markets set the cycle (Zimnisky 2025).
• Laboratory-grown substitution. Lab-grown stones reached about 20% of jewellery demand by 2024 and 8% of India's polished exports in FY2025, cutting demand for small natural stones.
• Producer supply discipline. De Beers cut 2025 guidance by a third to 20-23 Mct and then produced 21.7 Mct; Alrosa withheld sales in 2023. Supply cuts can slow price falls but build stocks.
• Sanctions and trade policy. G7 and EU bans on Russian diamonds, including stones cut in third countries, cover Russia's roughly 30% of world gem output by volume (USGS 2026); US tariffs added uncertainty for Indian exporters in 2025.
• Mine depletion. Many of the largest mines are past peak and some will close soon, so natural output is expected to keep declining (USGS 2026).
• Midstream credit and inventories. Indian cutters fund rough purchases with bank credit; when polished stocks build, they stop buying rough, which feeds straight back to miners.

Metrics to track