In-depth Analysis Report on the Supply and Demand Landscape Changes in Myanmar Jadeite Rough Stone Market

In-depth Analysis Report on the Supply and Demand Landscape Changes in Myanmar Jadeite Rough Stone Market

Abstract

This report provides an in-depth analysis of the recent changes in the supply and demand landscape of the Myanmar jadeite rough stone market. Influenced by multiple factors such as Myanmar's domestic political situation, resource depletion, tightening environmental policies, and the global economic environment, the supply of jadeite rough stones continues to shrink, while demand from the Asian market, centered on China, remains robust. This supply-demand imbalance has led to a continuous increase in rough stone prices, with the market showing trends towards high-end, premium, and investment-oriented products. Through data analysis, trend judgments, and investment recommendations, this report aims to provide comprehensive market insights and decision-making references for industry participants.

Industry Overview

Myanmar is the sole origin of over 90% of the world's high-quality jadeite, and its rough stone market holds a crucial position in the global gemstone industry. Jadeite, especially high-grade jadeite, is highly sought after in Asia, particularly in the Chinese market, due to its rarity, cultural value, and investment attributes. However, in recent years, the Myanmar jadeite rough stone market has been undergoing unprecedented profound changes. From traditional mining and trading models to macro factors such as geopolitics, resource management, and environmental protection, all are impacting its supply-demand balance and price trends.

Jadeite rough stone mining in Myanmar is primarily concentrated in the Phakant region of Kachin State. The mineral resource endowment of this region determines the global supply and quality of jadeite rough stones. Historical data shows that the Phakant mining area has experienced several large-scale mining booms, but over-extraction has led to the increasing depletion of high-quality resources. Concurrently, the Myanmar government's policy adjustments regarding the jadeite mining industry, such as suspending new mining licenses and restricting exports, have also directly impacted market supply.

Data Analysis

#### 1. Supply-side Changes: Continuous Contraction and Stricter Policies

1.1 Production and Export Data:

According to data from Myanmar's Ministry of Mines and Ministry of Commerce, legal exports of jadeite rough stones have shown a year-on-year decline in recent years. For instance, in the 2015-2016 fiscal year, Myanmar's jadeite rough stone exports peaked at approximately US$1 billion to US$1.5 billion (official data, actual figures may be higher), but have since declined. In 2016, the Myanmar government announced a suspension of all new jadeite mining licenses and further tightened management of existing mining areas in 2018. In 2020, the Myanmar government again announced an indefinite suspension of license renewals for jadeite mining in areas like Phakant, leading to the closure of numerous mines. According to the Myanmar Gemological Association, in the 2020-2021 fiscal year, legal exports of jadeite rough stones decreased by over 30% year-on-year. In the 2021-2022 fiscal year, due to the political situation, some official data is missing, but the market generally believes that actual exports further contracted, and illegal smuggling activities increased.

Figure 1: Trend of Myanmar Jadeite Rough Stone Legal Export Value (FY 2015-2022, Unit: US$ Billion)

(A chart should be inserted here, showing a bar or line graph of Myanmar's legal jadeite rough stone export value from 2015-2022, data source: Myanmar Ministry of Mines, Ministry of Commerce, industry association reports)

1.2 Resource Depletion and Rising Mining Costs:

After decades of intensive mining, the reserves of high-quality jadeite rough stones in the Phakant mining area have significantly decreased. Most rough stones extracted now are of medium to low grade, and high-quality "old pit" material is becoming increasingly scarce. This implies a significant increase in mining difficulty and costs. Mining companies need to invest more capital in deep mining and technological upgrades, which directly drives up the production cost of rough stones. According to industry insiders, the average mining cost of Myanmar jadeite rough stones has increased by approximately 15%-25% over the past five years.

1.3 Environmental Policies and Geopolitical Impact:

The Myanmar government is increasingly prioritizing environmental protection, intensifying efforts to address ecological damage in mining areas, leading to the closure of some mines due to non-compliance with environmental standards. Furthermore, the political instability in Myanmar in 2021 increased security risks in mining areas, disrupted transportation, and even led to the shutdown of some mines, further exacerbating supply shortages. While smuggling activities exist, their scale and quality are insufficient to compensate for the legal supply gap, and they come with significant risks.

#### 2. Demand-side Changes: China Market Dominance, Enhanced Investment Attributes

2.1 China Market Demand:

China has consistently been the largest consumer of Myanmar jadeite rough stones, accounting for over 80% of the global jadeite consumption market. Despite a slowdown in China's economic growth, demand from affluent classes for high-quality jadeite remains strong. Particularly under inflation expectations, jadeite, as a scarce physical asset, has attracted more attention for its value preservation and appreciation functions. According to data from the Gem & Jewelry Trade Association of China, the market size for finished jadeite products in China was approximately RMB 150-200 billion in 2022, with the proportion of high-end jadeite consumption increasing year by year.

Figure 2: China's Finished Jadeite Product Market Size and Proportion of High-end Products (2018-2022, Unit: RMB Billion)

(A chart should be inserted here, showing a line graph of China's total finished jadeite product market size from 2018-2022, and indicating the trend of high-end product sales or proportion, data source: Gem & Jewelry Trade Association of China, market research reports)

2.2 Growth in Investment and Collection Demand:

As global financial market volatility intensifies, the investment attributes of high-quality jadeite are becoming increasingly prominent. Many investors view jadeite as an effective tool to combat inflation and diversify risks. In the auction market, high-quality jadeite lots have repeatedly set new records. For example, at a Hong Kong auction house in 2023, a high-ice imperial green jadeite bangle sold for over HK$50 million, demonstrating the market's pursuit of top-tier jadeite. This investment demand further pushes up price expectations in the rough stone market.

2.3 Changes in Consumer Preferences:

Younger generations of consumers are also changing their perceptions and preferences for jadeite. They place more emphasis on design, cultural connotations, and personalized expression, showing less acceptance of traditional, outdated styles. This prompts jadeite processing enterprises to innovate in product design and brand building, indirectly affecting the demand for specific rough stone materials.

#### 3. Price Trends: Continuous Increase, Significant Gains for High-end Materials

The direct result of the supply-demand imbalance is the continuous increase in jadeite rough stone prices. According to data from the Myanmar Gem Emporium (official jadeite rough stone auction), in recent years, especially after 2016, the average transaction price of rough stones has shown a clear upward trend, with the increase for high-quality rough stones being even more astonishing. For example, at the 2018 emporium, the transaction price of a high-quality rough stone might have increased by 50% or even more compared to 2015. Although the emporium was suspended in 2020 due to the pandemic, prices in the secondary market and private transactions remained firm.

Figure 3: Myanmar Jadeite Rough Stone Gem Emporium Average Transaction Price Index (2015-2023, Base 2015=100)

(A chart should be inserted here, showing a line graph of the Myanmar jadeite rough stone gem emporium average transaction price index from 2015-2023, data source: Myanmar Gem Emporium official data, industry analyst estimates)

It is worth noting that the price increase for medium to low-grade rough stones has been relatively smaller, and some lower-quality rough stones even face the risk of being unsalable. This reflects the market's increasing pickiness regarding quality and its pursuit of scarce resources.

Trend Judgments

• Continued supply tightness will be a long-term trend: Resource depletion, environmental pressure, and political uncertainty in Myanmar will persist in the long term, meaning that the supply of jadeite rough stones is unlikely to increase significantly in the short term, and may even further contract. Strict government control over the mining industry will also become the norm.


• High-end and premium trends are irreversible: As high-quality rough stones become scarcer, the market will focus more on high-quality, collectible jadeite. The market share of medium to low-end jadeite will be squeezed, competition will intensify, and profit margins will shrink. Consumers and investors will be more inclined to purchase premium products, prioritizing quality over quantity.


• Prices will continue to fluctuate at high levels and rise moderately: Driven by tight supply and robust demand, the price of jadeite rough stones, especially high-quality ones, will remain high. Short-term fluctuations may occur due to macroeconomic or geopolitical influences, but in the long run, its scarcity will support its value to continue to rise moderately.


• Trading models may diversify: With increasing uncertainty in official gem emporiums, non-traditional trading models such as private transactions and cross-border e-commerce may become more active, but these also come with higher risks and opacity.


• Traceability and certification will be more valued: Consumers and investors are increasingly demanding higher standards for the origin, quality, and legality of jadeite. Jadeite products with authoritative certification and complete traceability systems will be more competitive in the market.

Investment Recommendations

• Focus on high-quality scarce resources: For investors and businesses, the focus should be on high-quality, scarce jadeite rough stones and finished products. Especially premium items that excel in "texture, transparency, color, and craftsmanship" have the greatest potential for value preservation and appreciation.


• Avoid low-end homogeneous products: Avoid stockpiling large quantities of medium to low-end or average-quality jadeite rough stones, as these products face significant market risks and price pressure in the future.


• Strengthen supply chain management and risk control: Given the complexity of the Myanmar market, establishing stable and reliable procurement channels is crucial. At the same time, closely monitor Myanmar's political situation and policy changes, and prepare risk contingency plans, including transportation, capital, and legality risks.


• Emphasize brand building and cultural empowerment: For processing and sales enterprises, strengthen brand building, enhance product added value through innovative design and cultural storytelling to meet the needs of new-generation consumers.


• Focus on technology empowerment and transparency: Actively introduce technological means, such as blockchain traceability and AI authentication, to improve product transparency and consumer trust.

Risk Warnings

• Myanmar Political Risk: The instability of Myanmar's domestic political situation is the biggest uncertainty, which may lead to mine closures, export interruptions, or sudden policy changes, significantly impacting rough stone supply.


• Resource Depletion Risk: The non-renewability and increasing depletion of high-quality jadeite rough stones mean that supply will continue to face challenges in the long run, potentially leading to sharp price fluctuations.


• Market Regulation Risk: The Myanmar government's regulatory policies for the jadeite mining industry may be adjusted at any time, including mining licenses, export quotas, and tax policies, all of which could affect market supply and demand.


• Economic Downturn Risk: A global economic downturn or a slowdown in China's economic growth may affect consumer purchasing power, which in turn could transmit to the jadeite market, leading to weakened demand.


• Counterfeit and Substitute Risk: There are numerous counterfeit and treated jadeite products, as well as other gemstone substitutes, in the market, which may impact consumer confidence and market order.


• Liquidity Risk: Jadeite rough stone investment has a long cycle, high capital occupation, and relatively weak liquidity. Investors need to fully consider liquidity risk.

This report aims to provide market analysis and investment recommendations and does not constitute the final basis for any investment decision. Investors should make prudent decisions based on a full understanding of market risks.