Lian Shan Southern Red Agate Raw Material Supply Tightens, Market Prices Poised for a New Surge
Liangshan, Sichuan, October 26, 2023 – The core production area of Chinese Southern Red Agate, Liangshan in Sichuan province, is currently experiencing significant shifts in its raw material extraction dynamics. According to in-depth field investigations by our reporter and aggregated information from various sources, the output of high-quality Southern Red Agate raw materials is continuously declining. This not only creates a tight supply situation in the market but also foreshadows a potential new upward cycle for Southern Red Agate prices.
Southern Red Agate has long held a significant position in China's jewelry and jade market due to its unique warm texture, rich persimmon or cherry red hues, and inherent scarcity. Liangshan, as one of its most crucial origins, has its mining activities directly influencing the pulse of the entire Southern Red Agate industry. In past years, driven by surging market demand, the mining intensity in the Liangshan area once peaked, accompanied by accelerated resource depletion.
“Based on our monitored data, the discovery rate of high-quality Southern Red Agate rough stones in the Liangshan area has decreased by approximately 20% year-on-year since the beginning of this year,” stated Professor Li Ming, Vice President of the Gems & Jewelry Trade Association of China and a senior jade expert, in an interview with our newspaper. “This is not an isolated incident but an inevitable consequence of long-term over-extraction and natural resource limitations. Especially those premium materials with pure color, fine texture, and no cracks or impurities, are now extremely rare.”
Market data indicates that over the past five years, the overall market size of Southern Red Agate has shown steady growth, with an average annual compound growth rate of about 8%. However, since the third quarter of this year, with the contraction of high-quality raw material supply from the origin, prices for some high-end Southern Red Agate finished products have already seen slight increases, ranging from 5% to 10%. If this trend of tight raw material supply persists, it is anticipated that within the next 6-12 months, the overall price of Southern Red Agate, particularly for mid-to-high-end products, could experience a more significant surge, potentially reaching 15%-25%.
Mr. Zhang, a seasoned merchant who has been trading Southern Red Agate rough stones in Liangshan for over a decade, revealed to our reporter: “It's getting harder and harder to find good materials when buying at the mines, and prices are much higher than before. In the past, I might have been able to acquire a decent batch of materials in a few days, but now it might take half a month, and I'm not even guaranteed to find satisfactory ones. Many old mining sites are essentially exhausted, and discovering new ones is increasingly difficult.”
The tightening supply of raw materials will undoubtedly have profound implications for every segment of the Southern Red Agate industry chain. For processing enterprises, it means increased procurement costs and compressed profit margins; for end retailers, it presents challenges in adjusting product prices and managing consumer acceptance. Simultaneously, this may also prompt the market to focus more on the cultural and collection value of Southern Red Agate, rather than merely its decorative aspect.
Looking ahead, the Southern Red Agate industry may enter a phase that emphasizes sustainable development and refined operations. Professor Li Ming suggested: “The industry should strengthen rational planning and protection of existing resources, while actively exploring new mining technologies to improve resource utilization efficiency. Furthermore, the market should guide consumers to establish correct collecting philosophies, recognizing the scarcity and artistic value of Southern Red Agate, rather than blindly pursuing short-term investment returns.”
The latest changes in raw material supply from the Liangshan production area undoubtedly serve as a wake-up call for the Southern Red Agate market, while also bringing new development opportunities and challenges to the industry. How to achieve healthy and sustainable development of the Southern Red Agate industry amidst limited resources will be a crucial task for all stakeholders.