In less than four years, gem-quality synthetic diamonds, or lab-grown diamonds, have gained shelf space in the trade and been recognised by consumers as a more affordable choice of gemstones. The International Grown Diamond Association (IGDA), the world’s first lab-grown diamond association, was founded in February 2016. President Vishal Mehta told Hong Kong Jewellery that some leading lab-grown diamond manufacturers have set noteworthy milestones with the size, quality and popularity of their lab-grown diamonds this year.
The production volume of lab-grown diamonds is currently around 0.5 percent of natural diamond’s annual production, according to Mehta. He says it is expected to grow exponentially in the next 10 to 15 years globally. “A 2014 Frost & Sullivan report has estimated that by 2018, global lab-grown diamond production would reach close to two million carats,” he added. Martin Rapaport, chairman of Rapaport even expressed his concern that “given global competition and unconfirmed reports of some 10,000 (synthetic diamond manufacturing) machines already operating in China, it is likely that supply of synthetic diamonds will skyrocket.”
Hong Kong Jewellery has interviewed China’s synthetic diamond practitioners and laboratories for an updated and in-depth understanding of the ‘Made-in-China’ synthetic diamonds.
Production and quality
To understand the development of the growth of synthetic diamonds in China, Gemological Institute of America (GIA) paid a visit in March 2016 to one of China’s major synthetic diamond producers - Jinan Zhongwu New Materials Co, Ltd in Shandong. Making no gem-quality CVD synthetics, the company mainly produces single crystal HPHT synthetic diamonds and exports to international jewellery markets. GIA’s executive vice president and chief laboratory and research officer Tom Moses observed: “China has significant synthetic growth capacity as the largest producer of HPHT synthetics in the world.”
The company’s Wang Dufu said that their current monthly output of gem-quality synthetics is around 3,000 carats, and by June 2016 it could increase to 5,000 carats. Their annual output can reach 60,000 carats. “Currently, we are the one and only manufacturer in China who operates the industrialised production of type Ib, IIa and IIb large synthetic diamonds in sizes up to 10 carats with stable techniques and the international technological standards,” he added. Their main products include colourless, yellow and blue synthetic diamonds ranging from 0.2 to two carats. For colourless synthetics, they are mainly in F colour, VS clarity or higher, and the prices are 30 to 50 percent of their natural counterparts’. After the site visit, GIA stated: “Jinan Zhongwu New Materials’ production volume is undoubtedly significant and likely to expand in the near future. This strongly suggests that even more large HPHT synthetic diamonds will be introduced into the jewellery industry.”
Regarding the manufacturing level of China’s synthetic diamond industry, Tom Moses said: “As with most producers, a range of quality is produced, but it appears that the local manufacturers are able to produce synthetics with high level of colour and clarity.” On this issue, Wang Dufu noted that synthetic diamonds applied in jewellery industry is a new direction. The production level of China’s large synthetic diamonds is relatively low, and the mainstream products are colourless synthetics with sizes less than 2mm in diameter. Li Jianjun, vice director of China’s National Gold and Diamond Testing Centre (NGDTC) held the same view. He thought that although the production of China’s HPHT synthetic diamonds is in a world-leading position, few manufacturers could produce large gem-quality synthetics. He also observed that synthetic diamonds in China range from 0.001 to 1.5 carats. Among them, the majority weighs from 0.001 to 0.01 carat. Most of the products are in K or higher colour while larger stones (0.1 to one carat) are in J to G colour, VVS to SI1 clarity.
Whilst, Taidiam Technology (Zhengzhou) Co, Ltd’s chief executive, Joe Yuan, said: “The production volume of China’s gem-quality synthetic colourless melees accounts for 100 percent of the global production, but the country’s HPHT large synthetic diamond output is relatively small while in high price level so that the proportion is around 50 percent of world production. For CVD synthetics, the percentage is almost zero.” Taidiam specialises in manufacturing mainly HPHT synthetic colourless melees and a small amount of medium-to-large colourless and fancy-coloured CVD. Their main markets span across mainland China, Hong Kong, Taiwan, Japan, India, Switzerland, France, Greece, Belgium, Australia, the United States, UK, Canada, etc. Yuan also revealed: “Taidiam is able to produce fine gem-quality synthetic diamonds while in need of massive funds to expand the production. The prices of our products are 70 to 80 percent of natural diamonds’, and will decline by more than 50 percent in the future.”
As the first Chinese member of IGDA, Caraxy Diamond Technology sells both HPHT and CVD diamonds. CEO Leon Guo stated that compared with foreign producers, the production of high clarity and large lab-grown diamonds in China has not yet achieved any significant breakthrough, along with a certain disparity in manufacturing scale. “We found that many large producers in China are working hard on R&D to improve product quality and facilitate scalable production,” he added.
Guo thought that the biggest competitiveness of Caraxy is product quality and their insight of local customers’ needs. “We never blindly chase to sell high-clarity and large stones, but paying much attention to meeting market demands,” he said. According to him, they offer white lab-grown diamonds ranging from 0.03 to five carats, yellow from 0.03 to four carats, pink and blue between 0.03 and two carats. Their white lab-grown diamonds are in G to I colour, VS to VVS clarity, and they also sell limited fine-quality lab-grown diamonds in D to F colour at a high price level. For fancy coloured diamonds, various colour grades are available including fancy intense yellow to fancy vivid yellow, fancy pink to fancy vivid pink and fancy blue to fancy vivid blue.
Industry and market
According to NGDTC’s Li Jianjun, generally, China’s synthetic diamond industry is growing in scale and reducing in cost. The current profit of gem-quality synthetic diamonds is remarkable as they offer customers more choices with just a few mass-producing suppliers. “China’s large-scale synthetic diamond jewellery market still needs to be nurtured,” he said.
When talked about the distribution of China’s synthetic diamonds, Joe Yuan is concerned about the lack of selling system in the market. He emphasised that with around 20 manufacturers, China is the largest synthetic diamond producer in the globe, but the selling procedures are fragmented and decentralised. Most of their rough synthetic diamonds are sold to cutting and polishing factories in India and then distributed to the world. While in this process, Indian cutters have been forcing the prices down to slightly higher than the costs. Considering this, Yuan suggests manufacturers to coordinate products and sell, improve technology and reduce costs in order to build a reasonable manufacturing and distribution system.
In terms of the distribution channels of ‘Made in China’ synthetic diamonds, Li Jianjun explained that Shanghai Diamond Exchange (SDE) is one of the main legitimate channels for the export of China’s gem-quality synthetic diamonds currently. “There are relevant national standards that have regulated the methods to identify labels of natural and synthetic diamonds in the circulation process,” he added. Leon Guo also revealed that lab-grown diamonds are being sold in domestic market through exhibitions, online platforms, jewellery show rooms, independent designers, etc. Furthermore, some local authoritative identification institutes including National Gemstone Testing Center (NGTC) can issue lab-grown diamond certificates facilitating sales and circulation.
Facing the general concern within the industry of the mixed selling of undisclosed synthetics and natural diamonds, Li stated that this has not been found in the production aspect, but he also mentioned: “Since diamond pipeline includes many segments from rough diamonds to finished jewellery, the mixed selling does exist in loose stone and jewellery wholesale and retail segments, especially since three to five years ago. For the last two years, with the maturing testing devices, identification institutes have offered practitioners a wide range of services and gradually achieved the identification of polished natural and synthetic diamonds of millimetre-size or above in particular.”
Prospective and outlook
Caraxy’s Leon Guo said, with the fact that the younger generation has gradually become the society’s backbone of consumption, lab-grown and natural diamonds will occupy different consumer markets, forming a brand-new structure of the diamond industry. He noted: “The development of lab-grown diamond in China will not only reply on technology and product innovation, but also manufacturers’ marketing capability and the supervision and support from jewellery-related institutes. I believe that in accordance with the current development trend of China market, lab-grown diamond will enter into a golden period in the next one to three years.”
“This year has seen a sharp turnaround in both attitude and willingness of the jewellery trade to work with lab-grown diamonds. With large names like Stuller on the wholesale side and Swarovski on the high-end branded side introducing lab-grown diamonds, this definitely looks like a watershed year for the development of the lab-grown diamond industry,” IGDA’s Vishal Mehta predicts.
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