The sector of jewelry with synthetic diamonds, whose driving force is partly consumers' fears about the sources of supply of natural diamonds and supported by wealthy investors, is growing exponentially. The accessibility and comparative quality of synthetic diamonds compel traditional traders to resort to rearguard battles to suppress competition.
The traditional diamond sector has been disturbed for some time, chased by accusations of tax evasion and money laundering, as well as in chronically insufficient operational transparency. Competition from manufacturers of synthetic diamonds emerged just when the sources of financing in traditional diamond trading centers, for example, in Antwerp, London and New York, began to dry out because of the problems faced by the industry. At the same time, the unforeseen decline in sales in China and the weakening of demand around the world in general caused the appearance of the highest ever reserves of natural diamonds, which put even greater pressure on extremely small rates of profit.
Before traditional traders there is an acute problem, connected with the fact that the cost of natural diamonds and, consequently, their perception as purchases, which are in great demand, will decrease as uncontrolled spread of synthetic stones. Already, there is more evidence of the arrival of synthetic diamonds in the supply chain of natural diamonds, which not only threatens to undermine consumer confidence, but also the reputation of the industry.
The origin of the sector of synthetic diamonds can be attributed to the 1950s, when General Electric first developed a laboratory production that culminated in the creation of a stone that could be used as an industrial abrasive. But the process was far from perfect, and only in the early 1970's, on an industrial scale were produced and began to use crystals of jewelry quality.
At present, most laboratory-grown diamonds are made by exposing huge temperatures and pressure to graphite. There is another, perhaps more effective, method in which natural gas is exposed to a microwave beam, resulting in carbon atoms that "stick" to natural diamonds, increasing them.
Such methods of production give precious stones of purity "flawless", which cost 30-40 percent less than natural diamonds. According to conservative estimates, currently the volume of the synthetic diamonds market reaches $ 100- $ 300 million, or more than 1 percent of the global diamond trade. According to Morgan Stanley, in the next few years this share will increase, and the sectors of small and large diamonds quickly reach about 15 percent and 7.5 percent respectively, further stimulating investment.
Behind trends in synthetics is a handful of diamond manufacturers supported by some of the biggest names in Hollywood and Silicon Valley. The presence in Marquee of investors such as DiCaprio, founder of Twitter Evan Williams and Facebook co-founder Andrew McCollum has already become visible through the advertising of laboratory-grown diamonds that many consumers like, That they do not wear the stigma attached to the diamonds mined in the conflict zones. The marketing campaign inflames demand so much that Transparency Market Research expects that by 2023 the synthetic polished diamond market will reach $ 28.8 billion, and jewelry with such stones will be the fastest growing and largest component.
Although wealthy buyers will continue to pay for genuine diamonds, it seems that synthetic diamonds will expand their share in the retail market of inexpensive diamonds, where the price takes precedence over "authenticity" in decision-making.
Since the so-called "blood diamonds" continue to raise questions about the industry's reputation, it has introduced more stringent means of controlling the sources of origin of diamonds under the Kimberley Process Certification Scheme approved by the UN, which, to some extent, Related issues. But in their place there was a new threat associated with dishonest traders, mixing synthetic diamonds in the supply chain. This issue was first announced in March 2012, when more than 600 synthetic stones were found in a batch of 1,000 natural diamonds originating from India, and recent single reports show that this practice is booming.
Despite obvious concerns about consumer confidence, industry experts warned that the issue would affect the prices of natural diamonds, scaring creditors already alarmed by the financial difficulties that traditional traders are currently experiencing.
In September 2014, McKinsey & Co, a global management consulting firm, warned that if consumers lose faith in the supply chain, then the natural diamond industry could experience the same "reputational demand shock", like that that hurt the fur trade in Late 1980s, when a campaign of animal rights activists attracted attention to the atrocities associated with the production of many types of clothing.
Being under enormous pressure, traditional traders are struggling. Their work included advertising workers, reminding consumers of the romantic appeal of natural diamonds. But to convince investors of the perfection of the supply chain remains the most difficult task.
While great efforts are being made to clearly delineate synthetic diamonds and natural diamonds through the identification and disclosure process, considerable investment and time will be required.
http://europe.newsweek.com/why-diamonds-could-be-about-lose-their-luster-520146?rm=eu
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