May 30, 2003
Cultured Pearl Market Update at JCK Show Conference Program
Richard Drucker of Gemworld International, publisher of The Guide, said pearl prices continue to be weak due to increased supply, especially in South Sea, Tahitian black and Chinese cultured freshwater pearls as he updated attendees at The JCK Show-Las Vegas on production and pricing in the major cultured pearl categories. Drucker said more types and methods of nucleation, often at a lower cost, are being used in culturing Chinese freshwater pearls, resulting in larger or rounder pearls. Drucker's session took place on the first day of the show's two-day conference program.
The numbers of cultured pearls are increasing in all major categories except for Japanese akoyas, which continue to have high oyster mortality rates and relentless competition from increasingly finer Chinese freshwater pearls. Production of South Sea pearls has increased from 375 kg. in 1980 to 5 tonnes in 2002. Tahitian black pearl production has increased from 400 kg. in 1980 to 11 tonnes in 2002. Gemworld International's sources tell researchers that, in lieu of reliable government figures, production of Chinese freshwater pearls is probably around 2,000 tonnes. By contrast, Japanese akoyas decreased from 230 tonnes in 1966 to 60 tonnes in 1996 and only 10 tonnes in 2002.
The top Japanese akoya pearls can still command high prices, but all other categories of akoya have experienced a decline in price, Drucker said. Overall pearl prices declined 30% in value in 2002, while Chinese freshwater pearls prices are down 60% in the same time period. Drucker gave an in-depth analysis of the main categories of cultured pearls and the technology used to produce them.
South Sea Cultured Pearls
These pearls were once perceived as a low-volume, high-profit category, said Drucker. Even though the finest strands hold their price, a typical 12-18mm graduated strand that once cost $30,000 might now be priced from $17,000-$22,000. Many imperfect pearls can be had for far less. Drucker showed strands available at the recent Tucson shows, starting at $740. To boost demand at a time of booming supply, said Drucker, several larger producers are forming marketing partnerships, such as Australian South Sea pearl megaproducer Paspaley's alliance with U.S. distribution giant Stuller, of Lafayette, LA, the line is being introduced at the Stuller booth during the JCK Show (see Professional Jeweler, June 2003, p. 12, for more details on this new venture).
Tahitian Black Cultured Pearls
The overproduction of commercial qualities is expected to ease, but suppliers still have overstocks of these pearls, so the effect on pricing should linger for a while, Drucker said. He estimates prices declined 40-60% from more robust times. At a Hong Kong auction held recently, prices were down 20% since the September 2002 auction. But several experts predict prices might now be stabilizing and confidence returning to the market. Still, Drucker said these are the pearls most difficult for his researchers to price, because there's too much inconsistency to be confident of the numbers.
Chinese Freshwater Cultured Pearls
These pearls can be produced up to 14 mm, said Drucker. Chinese producers recently admitted they have been using bead-nucleation since 1995, he said. There was debate for years as to whether Chinese freshwater pearls were mostly tissue- or bead-nucleated, but Drucker said it's widely believed the majority are bead-nucleated while still featuring impressively thick nacre. The beads used in nucleation have also experienced a price drop, with one producer using dolomite available for 50% less. There's been an increase in bead size as well, with one producer creating mother-of-pearl nuclei up to 20 mm in size, said Drucker.
Nucleation techniques are also growing more sophisticated. He cited an example of a company inserting a second bead into a sac that's already yielded a pearl. The second pearl grows faster because the sac was already formed.
In terms of pricing, a Chinese producers group called the Joint Venture Pearls Cultivation Holding has started to try to control production, but Drucker said he fears the effort may be too late to be effective. He said 9-10 mm near-round, high-luster white freshwaters can be purchased for $2,000 a strand, much lower than a comparable Japanese akoya strand.
Enhancements & Sources
Drucker advised that even higher-end pearls can be bleached, waxed, irradiated or dyed, saying jewelers must get assurances from trusted suppliers before selling pearls as "all-natural." Due to increasingly fine freshwater qualities, labs should be more consistent in identifying pearls as saltwater or freshwater, he said, since the two categories can be confused.
by Peggy Jo Donahue