Natural diamond prices have fallen sharply to levels not seen in more than two decades, with the industry facing a combination of weak demand, high inventories and growing competition from cheaper lab-grown alternatives. Wholesale prices for natural diamonds are now estimated to be around 30% to 40% below their 2021 peaks, putting significant pressure on miners, traders, cutters and jewellery markets worldwide.
The decline has also emerged as a major concern for India, which is the world’s largest hub for diamond cutting and polishing and processes about 90% of the world’s diamonds. The changing market is putting pressure on an industry that has traditionally relied heavily on the processing and export of natural diamonds.
The fall in prices has not affected all categories equally. Smaller and lower-quality natural diamonds have experienced greater pressure, while larger and higher-quality stones have remained relatively more resilient. One of the key reasons behind the decline is weakening demand in some major consumer markets.
De Beers, one of the world’s leading diamond companies, said trading conditions for rough diamonds remained difficult during the first half of 2026. Geopolitical and broader economic uncertainty affected consumer confidence and supply chains, while demand in mainland China continued to weaken. At the same time, the US market showed signs of improvement, with natural diamond jewellery sales returning to growth among independent jewellers. India, meanwhile, continued to record relatively robust demand.
Supply and inventory levels have added to the pressure. De Beers’ production of rough diamonds increased 46% year-on-year to 14.9 million carats during the first half of 2026. However, its revenue declined to $1.6 billion from $2 billion in the corresponding period a year earlier.
The company’s average realised price for rough diamonds also dropped significantly. It fell 32% to $105 per carat in the first half of 2026, compared with $155 per carat during the first half of 2025. Its average rough diamond price index declined 16% during the period. De Beers attributed the lower realised prices partly to the composition of its inventory, which contained a greater proportion of lower-value stones, as well as the overall decline in rough diamond prices.
Another major factor changing the diamond market is the rapid growth of lab-grown diamonds. These stones have the same crystal structure as natural diamonds but can be manufactured on a large scale, enabling them to be sold at substantially lower prices.
The growing availability of lab-grown diamonds has particularly affected the market for smaller and lower-value natural stones. De Beers has also acknowledged that synthetic diamonds continued to exert pricing pressure on these categories during the first half of 2026.
Prices of lab-grown diamonds themselves have also declined dramatically as production capacity has expanded. Industry analyst Edahn Golan told Reuters in October 2025 that average wholesale prices of one- and two-carat lab-grown diamonds had fallen by as much as 96% since 2018. Increasing production in countries such as China and India has contributed to the sharp reduction in prices.
For India, the changing global market has direct implications for exports and employment across the diamond-processing sector. The country’s cut and polished diamond exports declined 8.5% year-on-year to $12.16 billion in the financial year 2025-26, their lowest level in more than two decades, according to figures cited from the Gem and Jewellery Export Promotion Council.
India’s overall gems and jewellery exports also declined during the financial year, falling 3.3% to $27.72 billion. Exports to the United States, India’s largest market, fell 45% to $5.09 billion. The figures underline the extent of the pressure facing India’s diamond-processing industry as consumer preferences, prices and global supply patterns change.
The continuing decline in natural diamond prices therefore reflects more than a temporary downturn. The industry is facing a combination of changing consumer demand, excess inventory, increased production and the rapid expansion of lab-grown stones. For India’s diamond sector, which has built a vast processing and export ecosystem around natural diamonds, the shift presents a significant challenge as the global market adjusts to a new price and supply environment.
