Liangshan Southern Red Agate Raw Material Supply Tightens, Market Prices Poised for New Round of Increases

Liangshan Southern Red Agate Raw Material Supply Tightens, Market Prices Poised for New Round of Increases

Liangshan, Sichuan, October 26, 2023 – Recent developments in the mining activities of Southern Red Agate in Sichuan's Liangshan region, one of China's and indeed the world's most significant production areas for this gemstone, indicate a notable decline in the output of high-quality raw materials. This shift is gradually impacting downstream markets, suggesting that Southern Red Agate prices may be on the verge of a new round of increases.

For a long time, Liangshan Southern Red Agate has been highly sought after by collectors and consumers for its warm texture and unique, rich colors such as persimmon red and crimson red. However, according to the latest reports from the production area, the difficulty of mining Liangshan Southern Red Agate has continuously increased in recent years. On one hand, after years of intensive exploitation, surface and shallow high-quality ore veins are nearing depletion, forcing miners to delve deeper underground, which consequently drives up extraction costs. On the other hand, the complex geological conditions also add to the uncertainty of mining, leading to a significant reduction in the discovery rate of high-quality rough stones.

"We have observed that the supply of high-quality Southern Red Agate rough stones from the Liangshan region has decreased by at least 20% in the past six months," stated Professor Li Ming, Vice President of the Gems & Jewelry Trade Association of China and a senior jade appraisal expert, in an interview. "Especially those collector-grade persimmon red, cherry red, and ice-floating materials, their scarcity is becoming unprecedentedly prominent. This contraction in supply will inevitably have a direct impact on market prices."

Market data indicates that despite various global economic uncertainties, demand for Southern Red Agate, as a rare gemstone with cultural attributes and investment value, remains robust. According to preliminary estimates by industry institutions, the Chinese Southern Red Agate market size surpassed 10 billion RMB in 2022 and is expected to maintain a compound annual growth rate of over 10% in the next five years. Under the dual pressure of continuous demand growth and increasingly tight supply, price increases are an inevitable trend.

Currently, the average price of first-grade Southern Red Agate rough stones from the Liangshan production area has risen by approximately 15%-20% since the beginning of the year, with some top-tier materials seeing increases of over 30%. Downstream processors and retailers generally report significant pressure from rising procurement costs, but to maintain product quality and market competitiveness, they are compelled to accept higher raw material prices. Industry insiders predict that if the shortage of high-quality raw material supply cannot be alleviated, finished Southern Red Agate products may see a further 10%-25% price increase within the next six months.

"This trend presents both challenges and opportunities for the entire Southern Red Agate industry chain," Professor Li Ming added. "For consumers, it means a higher investment threshold, but it also highlights the value of existing high-quality collections. For industry practitioners, it necessitates a greater focus on rational resource utilization and refined product processing to enhance added value and cope with rising raw material costs."

Looking ahead, with resource depletion and increasingly stringent environmental policies, the scale of mining and output of Liangshan Southern Red Agate are expected to be further restricted. This will not only accelerate the prominence of its rarity but also prompt the market to pay more attention to the cultural, artistic, and collection value of Southern Red Agate. Industry experts advise consumers to prioritize quality and origin when purchasing, while investors should focus on its long-term appreciation potential and enter the market cautiously.

The current raw material supply tightness in the Liangshan production area undoubtedly serves as a wake-up call for the Southern Red Agate market, signaling the advent of a new era characterized by a greater emphasis on quality, increased scarcity, and higher prices.