A Diamond Market Divided, Not Down

There has been a trickle of positive news from the diamond market, suggesting stabilization, or even a recovery, may be taking hold.

Alrosa made that case in its latest press release, arguing that a tightening in supply is reversing the downward trend in rough and polished prices seen over the past few years.

That’s a bold claim, and even by Alrosa’s own admission it applies mainly to the higher-priced segment, particularly goods in the 2-carat to 10-carat range. That segment accounts for about 80% of the company’s production value, where prices have risen 6% to 9% since the start of the year, but it represents a far smaller share of its overall volume.

The report is another reminder of the dominant theme shaping the market over the past couple of years, bifurcation.

The rise of lab-grown diamonds has pushed natural diamonds further into segments of resilient demand, leaving a significant portion of lower-quality goods, especially those below 2 carats, struggling for relevance.

Signet Jewelers echoed that reality in its latest full-year results. Natural diamonds are skewing toward the higher end and are increasingly an average selling price story, CEO J.K. Symancyk said on the earnings call, while lab-grown continues to gain traction, particularly in fashion jewelry.

Signet reported roughly a 50-50 split between natural and lab-grown in bridal, while lab-grown accounted for about 15% of fashion jewelry sales, rising above 20% during the holiday season.

Symancyk also pointed out that diamonds have historically had lower penetration in fashion jewelry, where center stones are less prominent, leaving room for lab-grown to expand the category. Pricing for both categories showed signs of stabilizing toward the end of last year, with slight increases at wholesale, he added, lending some support to Alrosa’s view of a market turning point.

Still, any improvement is concentrated where there is sustained demand, rather than widespread growth across categories. Broad statements about the health of the diamond market no longer hold. The market has narrowed to specific segments, and performance depends on where you’re positioned within them.

On the supply side, producers are trying to align with those lower levels of demand. Alrosa projects global production will fall below 100 million carats in 2026. The challenge for large-scale miners is that they can’t pick and choose what they recover. As a result, the market will inevitably be left with a meaningful share of less desirable goods, for which the industry must either rebuild demand or find alternative uses.

This blog first appeared in the March 23 Pressing Matters Executive Memo. Read the full memo here, Pressing Matters.

Image: Alrosa rough diamonds. (Alrosa)