China is the world's largest producer of synthetic diamond and has the pricing power of high temperature and high pressure industrial grade diamond. In 2020, the total output value of China's superhard materials industry will reach 5 billion yuan, and China's diamond output will reach 20 billion carats, including 14.5 billion carats of diamond single crystal and micro powder, 2.44 million carats of gem grade single crystal and 5.87 million pieces of diamond composite chips. China's diamond has reached the international advanced level and has a leading industrial cluster (Henan), In 2020, China's diamond single crystal output accounted for more than 90% of the global total output.
The downstream application scenarios of industrial diamond are broad and the demand is stable: the production mode of artificial diamond is divided into HPHT (high temperature and high pressure method) and CVD (chemical vapor deposition method). The main application scenarios include industrial diamond and cultivated diamond. Both products are produced by the same press, but the process formula is different. In the field of industrial diamond, The diamond single crystal and micro powder produced by high temperature and high pressure method are mostly used to make tool products such as sawing, drilling and grinding, and the diamond single crystal produced by CVD method is mostly used to make functional products such as chips and sensors. China is relatively leading in high temperature and high pressure technology, and the advantages of foreign CVD technology are more obvious.
Marginal change: cultivate high-profile diamonds and squeeze industrial diamond production capacity. The supply of industrial diamonds is tight, or the price may rise. Since 2020, the terminal consumption of cultivated diamonds has maintained a high boom. The total export volume of cultivated diamonds in India has increased by more than 100% year-on-year. The diamond business cultivated by diamond manufacturers has squeezed the traditional industrial diamond production capacity. At the same time, the supply of press from upstream equipment manufacturers is limited, the demand of downstream terminal industries has developed steadily, and the momentum of price increase of upstream industrial diamonds has emerged. In April 2020, Jiangxi diamond bit Association issued a notice that it decided to increase the price of diamond bit by 20% from the original price in 2020. The performance forecast of Henan Liliang Diamond Co.Ltd(301071) 2021 also mentioned that the supply of diamond single crystal market was tight and the sales price increased significantly.
Investment suggestion: both industrial diamond and cultivated diamond are the main two types of artificial diamond products. Under the condition that the penetration rate of cultivated diamond increases rapidly and the supply of upstream equipment manufacturers is limited, resulting in the limited overall upstream production capacity, the expansion of cultivated diamond production has reduced the production capacity of industrial diamond to a certain extent, and the price of industrial diamond may also rise. Henan Liliang Diamond Co.Ltd(301071) is recommended. It is recommended to pay attention to industrial diamond leaders North Industries Group Red Arrow Co.Ltd(000519) and Henan Huanghe Whirlwind Co.Ltd(600172) .
Risk tip: the global epidemic is repeated, the capacity expansion of diamond manufacturers is less than expected, and the acceptance of downstream tool manufacturers and terminal industries is less than expected
