According to the Diamond Reports, Laboratory-Grown Diamond [LGD] Facts, by Natural Diamond Council [NDC] that attempted to reply the question, why have LGDs prices fallen so much? And said, prices of laboratory-grown diamonds have fallen significantly in recent years. For example, over the last ten years, the retail price of a 1.5 carat laboratory-grown stone has fallen 86% from $10,750 to $1,45525.

The actual price of a synthetic diamond varies depending on its size and manufacturer. However, the key factors that influence the general lower price trend are falling production costs and the change in pricing structures.

Looking at the Production Cost, the report said, when the first jewellery-quality synthesised diamonds appeared on the market in the 1970s, production costs were very high even though the stones were mostly small, and yellow or brown in colour. Since the commercial development of chemical vapour deposition [CVD] technology in the early 2000s, the cost of manufacturing has fallen dramatically in line with technological advances and economies of scale.

Machines that were previously used to make industrial diamonds have also been repurposed for gems, bringing new producers to the market and ramping up competitive pressures. Global management consultants Bain &

Company estimates that in the 10 years from 2008 to 2018, the average production costs of a high-quality laboratory-grown 1-carat stone fell by 90%.

Looking at the recent price trends, the report suggested, since 2018, prices of laboratory-grown diamonds have continued to fall still further both at retail level and even more so at wholesale, demonstrating a big increase in retail margins on laboratory-grown diamonds over the period.

Consider, for example, a 1ct round near colourless (FGH) high-clarity (VS1) laboratory-grown diamond. Data supplied by analysts Edahn Golan on wholesale prices and Paul Zimnisky on retail prices shows that the wholesale price for this product is now just 5% of what it was 7 years ago in 2018 (i.e. it has fallen by 95%), while the retail price is 24% of what it was in 2018 (a fall of 76%).

Analysis by Paul Zimnisky for the last 5 years shows that the average retail margin on laboratory-grown diamonds has increased over the period from 46% to 84%. Put another way this means the average mark-up on synthetic diamonds has increased from 85% to over 500%.

Finally, reviewing pricing structures, in nature, the available supply, size and quality mix of natural diamonds depends completely on geology. Large diamonds are very rare. It is not surprising therefore that a 2 carat stone can be priced significantly more than twice the price of a 1 carat stone as this is a reflection of its rarity.

This natural phenomenon does not exist in the synthetic diamond market, where the main constraint is the manufacturing capacity of each producer. A larger synthetic stone requires more energy and takes longer to produce than a smaller one, but the relationship is broadly linear – the production costs for a 2-carat stone are twice that of a 1-carat stone.

When laboratory-grown diamonds began appearing in commercial quantities in the jewellery market around 9-10 years ago, prices were typically slightly cheaper (around 10%) than those of natural diamonds of the same size. However, as the laboratory grown diamond market has expanded and competitive pressures have increased, the relationship between natural diamond and laboratory-grown diamond prices has diverged. The differences have not been uniform across all sizes and qualities – they have been highest for larger stones because of the rarity of large natural diamonds.