After a long slowdown, China’s demand for natural diamonds may finally be picking up again. Indian diamond exporters are hopeful as Chinese jewellery retailers launch new buyback programs to attract customers. India which is the second-largest market for natural diamond jewellery, with the growing demand at home and signs of recovery abroad, the natural diamond industry could be entering a new phase of growth. This change also brings new opportunities for investors and exporters.
Let’s understand the latest developments and what’s in them for investors.
What’s Happening?
After a three-year decline, China’s demand for natural diamonds may finally revive soon. In a strategic move to revive interest in natural diamonds, top Chinese jewellery retailers such as Chow Tai Fook, Chow Sang Sang, Lao Feng Xiang, and others, have introduced diamond buyback programs, similar to those used for gold. This initiative has sparked fresh consumer interest and renewed optimism among Indian exporters.
India, the world’s largest exporter of cut and polished diamonds, has seen its diamond exports to China shrink from $6.55 billion in 2021-22 to $3.28 billion in 2024-25, as Chinese buyers shifted their focus to gold amid economic uncertainty. But now, with the buyback program gaining traction, exporters believe the demand will pick up as early as September, following the traditionally slow growth during June to August.
Key Factors Behind the Decline in Diamond Demand
Several headwinds in China contributed to the slump in diamond consumption and they are:
Weak Consumer Spending: After the COVID-19 pandemic impacted luxury purchases like natural diamonds.
Real Estate Crisis: China’s real estate crisis reduced household wealth, lowering discretionary spending.
Trade Tension: Trade issues with the US hurt overall economic confidence and buyer sentiment.
Lab-grown Diamonds: Acting as an alternative, Lab-grown Diamonds gained popularity among young consumers due to lower prices and modern appeal.
Rising Gold: Gold was seen as a safer and more stable investment following geopolitical tensions, leading to a shift away from natural diamonds.
India’s Growing Role in the Natural Diamond Market
India has become the second-largest market in the world for natural diamond jewellery, overtaking China. India’s natural diamond market has grown rapidly after the COVID-19 pandemic and has now reached a size of around $3.5 to $4 billion. Not only that, this sector has been witnessing a remarkable annual growth rate of up to 20%.
Interestingly, solitaire diamonds are becoming popular, especially among new-age buyers. Despite being one of the top consumers, India still has room to grow as its diamond buying rates are lower than those in mature markets like the US. India also plays a big role in the global diamond supply chain by cutting and polishing diamonds for the world. With 11% of global demand coming from India, the country’s contribution is growing rapidly.
What’s in It for Investors?
The expected rebound in Chinese demand for diamonds is not only positive news for diamond exporters but also brings a fresh opportunity for investors in the stock market. If exports to China pick up again, it could help Indian diamond exporters grow their business and hence revenue and profitability.
This growth might ease the margin pressures that these companies have faced in the past few years. A rise in international orders could also lead to a better outlook for listed jewellery and diamond companies, which may reflect in their stock performance. Indian exporters and listed diamond companies could benefit from the latest move by China’s diamond retailers, as companies may now receive new orders.
What’s Next?
The diamond industry is entering a crucial phase. Natural diamonds are becoming harder to find as production has fallen sharply over the years. As mentioned in The Economic Times, diamond recovery has gone down by 30% since 2005, and there have been no major new discoveries in recent years. At the same time, demand is expected to rise again, especially with China showing signs of recovery along with the continuously rising domestic demand.
The supply of natural diamonds has declined in the past few years, but the demand still remains strong. In 2024, the global natural diamond market was valued at 97.57 billion US dollars and is expected to grow steadily to 138.66 billion dollars by 2032, with an annual growth rate of 4.5 percent. In comparison, India’s diamond market is expanding much faster, growing at a strong pace of 20% each year post COVID-19.
Investors must watch closely how the buyback program in China plays out and whether it leads to a lasting revival in global diamond demand.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
