(Yicai) Sept. 4 -- The price of laboratory-synthesized diamonds, which are cheaper than natural diamonds, has stabilized after a big drop earlier this year, but whether or not it will start to climb again is not clear, leading Chinese artificial diamond producer Liliang Diamond told Yicai today.

Weak overseas demand, increased output and oversupply in the middle of the industrial chain are the main reasons for the slump in the price of lab-grown diamonds, analysts said. South African diamond miner De Beers has also been lowering the prices of rough diamonds in recent years, which has dragged down the price of synthetic diamonds.

The price of China’s lab-grown diamond exports plunged 35 percent in the first five months from a year earlier to USD24.80 per carat, according to China customs data.

This has had a major impact on the performance of man-made diamond makers. Liliang Diamond’s net profit plunged 27.9 percent in the six months ended June 30 year on year to CNY172 million (USD23.7 million), the Shangqiu, central Henan province-based company said in its latest earnings report. Revenue tumbledl 19.4 percent to CNY361 million (USD49.6 million), and earnings from its synthetic diamonds plummeted 54 percent to CNY102 million.

Rival North Industries Red Arrow logged a 85 percent dive in net profit over the period to CNY105 million and revenue sank 40.2 percent to CNY1.9 billion (USD261.3 million), and Henan Huanghe Whirlwind posted losses of CNY219 million and a 21 percent drop in revenue to CNY1.1 billion.

But the oversupply of lab-grown diamonds will end, as the pace of growth in output slows and as artificial diamonds become more readily interchangeable with industrial diamonds, TF Securities said in a research note.

Global production of lab-grown diamonds will increase in the short term between 2021 and this year as the output of natural diamonds decreases, the broker said. Overall, the synthetic diamond sector is entering a period of prosperity with increased supply and greater demand.

Editors: Zhang Yushuo, Kim Taylor