Mount Liangshan Southern Red Agate Market Faces Upward Price Pressure Amidst Worsening Supply-Demand Imbalance

Mount Liangshan Southern Red Agate Market Faces Upward Price Pressure Amidst Worsening Supply-Demand Imbalance

Liangshan, Sichuan, October 26, 2023 – Recent developments in the mining activities within Sichuan's Liangshan region, one of China's and indeed the world's most significant sources of Southern Red Agate rough, indicate a substantial shift. In-depth journalistic investigation and cross-verification of information from various sources within the mining area reveal a persistent decline in the output of high-quality Southern Red Agate rough. This trend is posing a severe supply challenge to the entire Southern Red Agate market, particularly the high-end segment, and has already begun to translate into price increases at the consumer level.

For an extended period, Liangshan Southern Red Agate has been highly sought after by collectors and consumers alike, owing to its warm texture, rich persimmon red and cherry red hues, and unique gelatinous feel. However, years of intensive mining have undeniably led to the depletion of premium mineral veins. An anonymous mine owner in Liangshan stated, “It's much harder now to unearth a piece of Southern Red Agate with good color and size compared to before. Previously, ten loads of material might yield a few exquisite pieces; now, a hundred loads might not even produce one.” This escalating difficulty in extraction directly contributes to soaring mining costs.

Market data indicates that over the past year, the overall output of high-quality Southern Red Agate rough from the Liangshan region has decreased by approximately 20% to 30% compared to the average of the preceding three years. The decline is even more pronounced for collector-grade “full-flesh persimmon red” and “ice-floating” varieties, with some experiencing a halving of their output. Concurrently, market demand remains robust. According to the latest report from the Gemological Association of China (GAC), the total scale of China's jade market exceeded 100 billion RMB in 2022. Southern Red Agate, as an emerging collectible category, has seen its market share increase year by year, with an anticipated growth rate of over 5% this year.

“This structural imbalance between supply and demand will inevitably drive prices higher,” noted Dr. Li Mingde, a renowned gem identification expert and visiting professor at the Gemological Institute of China University of Geosciences (Wuhan), in an interview with this newspaper. “The scarcity of Southern Red Agate resources is fundamental to its value. When premium resources become even scarcer, their market value naturally appreciates. We anticipate that within the next year, prices for high-end Southern Red Agate rough from the Liangshan region will see an increase of 15% to 25%, with the finished product market adjusting accordingly.”

Currently, initial signs of price increases are already observable in the market. Feedback from merchants in major jewelry and jade distribution centers like Beijing's Panjiayuan and Shanghai's Chenghuangmiao indicates that wholesale prices for finished Southern Red Agate products of comparable quality have generally risen by 5% to 10% in the past three months. Some rare or exquisitely carved pieces have seen even higher increases.

In response to the challenge of resource depletion, the industry is actively exploring countermeasures. On one hand, some merchants are beginning to look towards alternative agate resources in regions such as Africa, though their quality and market acceptance still require time to be established. On the other hand, there are calls for strengthening scientific planning and sustainable mining practices in existing mining areas to avoid excessive, predatory extraction. However, these measures are unlikely to reverse the tightening supply of Liangshan Southern Red Agate in the short term.

Looking ahead, the increasing scarcity of Liangshan Southern Red Agate will further underscore its collection value. For investors and collectors, now may be a opportune window to focus on and acquire high-quality Southern Red Agate. However, market participants must also be wary of the risk of non-premium items being hyped opportunistically. It is crucial to conduct transactions through legitimate channels and seek assistance from professional appraisal institutions to prudently assess investment value.

These recent developments in the Liangshan mining area undoubtedly serve as a wake-up call for the entire Southern Red Agate market, signaling the advent of a new era characterized by even scarcer resources and higher prices.