“Now whoever can get the supply contract can make money.” A diamond wholesale retailer admitted to the associated press.
Stimulated by the strong demand in the downstream, cultivated diamonds are still in shortage and rising prices. Driven by profits, there is a “seesaw effect” in the distribution of industrial diamond and cultivated diamond production capacity. The existing production capacity of most companies is more inclined to cultivated diamonds, squeezing the industrial diamond production capacity, resulting in the rise of industrial diamond prices. In 2022, the industry’s leading enterprises accelerated their production expansion, but the construction of new production capacity was slow, and the tight supply situation in the industry was difficult to change in the short term.
“make money when you get the goods”
A few days ago, the reporter of the financial Associated Press visited a well-known diamond cultivation enterprise in Henan. The relevant person in charge told the reporter of the financial associated press that the overall supply of the company’s products is still in short supply, the spot is basically unavailable, and it needs to be booked 1-2 months in advance. We have signed a long-term framework agreement with our customers, which does not lock the price. After the customers see the goods, they negotiate according to the market situation. Many old customers will directly book the next batch after they get the goods, and it is difficult for new customers to get the goods.
Midstream wholesale retailers also confirmed this statement. He told the financial Associated Press: “the recent market situation is very good. Everyone is lining up to pick up goods. Big factories don’t pick up new customers and have to pay in advance. Now whoever has a supply contract can make money.”
According to India’s import and export data, in February, India’s imports of cultivated diamond blanks were US $155 million, a year-on-year increase of 84.4%, a month on month increase of 1%, and the exports of cultivated diamond blanks were US $126 million, a year-on-year increase of 114.6%, a month on month increase of 3.2%. Among them, the total exports of cultivated diamonds accounted for 6% of the total diamond exports in February, a year-on-year increase of 2.7 percentage points.
Liu Yangyang, an industry veteran, said in an interview with the financial Associated Press: “It’s absolute that you can make money when you get the goods, which requires a combination of cost and risk. Generally, there is a discount for the amount of goods taken by old customers, and the cost of new customers will be high if new customers need a premium. In addition, there is also a risk of loss in the cutting and grinding process of cultivating diamond blanks, and it’s not impossible to invalidate the whole blank. It can only be said that it’s a high probability to make money when you get the goods in the current market.”
At present, cultivated diamonds have not yet formed their own price system, and the price is benchmarked against natural diamonds. Since this year, the rise in the price of natural diamonds has driven the price of cultivated diamonds to rise again. The above person in charge said that in the short term, the probability of cultivating diamond price reduction is small, and the tight supply and demand situation in the industry will be maintained for at least 3-5 years. Liu Yangyang explained that the main driving force for the rise of cultivated diamonds this year is driven by downstream demand. We can clearly feel that more and more consumers understand and consult us about cultivated diamonds through various channels.
“seesaw effect” causes the price of industrial diamond to rise sharply
Although the application scenarios of industrial diamond and cultivated diamond are different, the equipment used in the production of high temperature and high pressure method is the same as the press, which only needs to be switched in the press process. Driven by the profit of diamond cultivation, there is a “seesaw effect” in the distribution of industrial diamond and diamond cultivation production capacity. Most companies’ existing production capacity is more inclined to diamond cultivation, squeezing the industrial diamond production capacity, and the price of industrial diamond rises sharply. A brokerage analyst told the financial associated press that the price of industrial diamond has increased several rounds.
“Compared with industrial diamonds, the price rise of cultivated diamonds is relatively mild. Since last year, the price rise of industrial diamonds has reached 50%. Under the pressure of production capacity, the supply of industrial diamonds is also very tight.” The person in charge said so.
It is reported that industrial diamond is widely used downstream. The diamond single crystal and micro powder produced by high temperature and high pressure method are mainly used for the manufacture of tool products such as sawing, drilling and grinding, while the diamond single crystal produced by chemical vapor deposition method is mostly used in high-tech fields, such as the manufacture of functional products such as chips, sensors, high-power laser devices and extreme environment detectors.
Henan Liliang Diamond Co.Ltd(301071) ( Henan Liliang Diamond Co.Ltd(301071) . SZ) annual report shows that the gross profit margin of diamond single crystal products is 57.93% in 2021 and 39.44% in 2020. In the annual report, the company said that the demand for cultivating diamonds has increased rapidly, and China’s mainstream manufacturers have significantly increased the production of cultivating diamonds. However, the slow construction progress of new production capacity has led to a significant reduction in the production capacity of industrial diamonds. In addition, the demand for industrial diamonds in the fields of photovoltaic, new energy and consumer electronics has increased, and the sales price has increased significantly under the tight market supply.
In the current field of superhard materials, the competitive environment is not fierce, and everyone is trying to expand production capacity. According to public information, North Industries Group Red Arrow Co.Ltd(000519) ( North Industries Group Red Arrow Co.Ltd(000519) . SZ) is expected to produce 120000 carats of gem grade cultivated diamond production line equipment in 2022 and put into operation successively Henan Huanghe Whirlwind Co.Ltd(600172) ( Henan Huanghe Whirlwind Co.Ltd(600172) . SH) currently has a project with an annual output of 5 million carats under construction Henan Liliang Diamond Co.Ltd(301071) listing raised 274 million yuan for the intelligent chemical plant project. It is expected to complete the construction of Baojing intelligent chemical plant by 2022, and it is planned to purchase 320 compressors.
A relevant person close to Henan Liliang Diamond Co.Ltd(301071) told reporters that Henan Liliang Diamond Co.Ltd(301071) focuses on expanding production capacity, and the production capacity will rise sharply in the future.
In Liu Yangyang’s view, the main reason why it is difficult to expand production capacity in a short time is not the number of presses, but the capital and technical barriers, and finally the press. In fact, this industry is not an industrial product simply imagined by the outside world. It has high technical barriers and long-term precipitation.
