Diamond is forever yours until it is sold. Indeed, people are selling diamonds, and abandoning the dreams behind those stones.
Despite the long existence of the second-hand diamond market, it is the economic crisis in the late 2008 and the following deep recession stimulated the growth of this particular market segment. The United States and Japan have been the main forces of the recycled diamond trade with rich pawnshop culture and huge jewellery consumption made during the boom years of the 1980s and 1990s.
Based on the data from Japan’s Ministry of Finance, the country’s used diamond exports in the first four months of 2015 rose sharply by 77 percent to 38,032 carats year on year, the highest since 2007. According to JCK, analysts estimated overall sales of recycled diamonds within the trade and to consumers, at about US$1.5 billion to US$2 billion a year, out of US$81 billion in diamonds sold globally at retail.
From a trade perspective, it is a fact that the high rough price has prompted traders to look for other ways to maximise their profit margins, such as product diversification, fancy coloured diamonds, and lower priced recycled diamonds, Nele Bouchier, PR and communication senior manager of Antwerp World Diamond Centre (AWDC) told Hong Kong Jewellery. He also expressed: “The recycled diamond market is clearly a growing trend, but we do not envision it disrupting our core market share.”
Bouchier described the booming recycled diamond market as “a relatively small phenomenon” in the diamond industry. Vipul Sutariya, director of the 25-year-old Mumbai-based Dharmanandan Diamonds Pvt Ltd holds the same view. “Recycled diamonds keep coming into the industry. Diamantaries especially retailers buy them because second-hand diamond sellers are in need of money, offering lower prices than new diamonds. Whereas, it is not possible that recycled diamonds, all of a sudden, dominate the whole diamond industry. Generally, people who bought diamonds will not sell them that easily,” he said.
For countries like India, the recycled diamond market has offered a new chance for surviving tough times for the industry. According to the Gem & Jewellery Export Promotion Council (GJEPC), India imported US$7 billion worth of diamonds in 2014-15 compared to US$6.5 billion in 2013-14. Majority of the diamonds imported were second-hand diamonds. Dinesh Navadia, president of Surat Diamond Association (SDA) even noted to the Times of India that “For many in the industry facing trouble, second-hand diamonds are the best way to do business.” He also emphasised that recycled diamonds help diamantaires purchase top-quality diamonds at cheap rates, add value and sell in the global market with huge profit margins.
However, De Beers showed their worries about the lowball offers of recycled diamonds at the market, which according to them will hurt consumers’ perceptions of diamond products and potential market demand. De Beers even launched the International Institute of Diamond Valuation (IIDV), which is now a pilot project with five registered jewellers built in a New York City lab that will value recycled diamonds for retailers, offering “the highest possible price” on the secondary, wholesale market. The programme is expected to supervise recycled diamond prices bidden by retailers.
Similarly, large manufacturers or sightholders are also concerned about the threat recycled diamonds could cause to their businesses. Gil Melamed, managing director and the third-generation of his family to run Vulcan and Co, stressed his concern that lower-priced recycled diamonds would threaten the profitability of large manufacturers in the market with legal sources. Vulcan and Co is an Israeli diamond manufacturer specialised in fancy shape diamonds with over 60 years. The company sources rough stones in Africa, Russia and Canada in accordance with the Kimberly Process with stringent internal controls.
“We have been emphasising the stories behind the diamonds like where they came from, the cutting and polishing procedures they have gone through, etc, which are what customers seek for whilst second-hand diamonds can’t offer,” he added.
Melamed shared that, in addition, sources of recycled diamonds cannot be sure, especially after many treatments have been done for better shapes or designs fit for customers’ modern tastes. “Once those treated recycled diamonds are set in jewellery and sold to end customers, you can’t tell the differences between them and new diamonds. I don’t know how many retailers are doing this in the market,” he said.
Bouchier seems optimistic on this issue: “Every diamond carries along with its own certificate issued by a grading lab. If a diamond is re-cut for re-selling, it will not match its original certificate and has to be re-certificated according to its new properties, such as carat, size and cut. Any treatment processes will be identified at this stage upon testing.”
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