Supply-Demand Imbalance Intensifies in Liangshan Southern Red Agate Production Area, Market Prices Face New Upward Pressure

Supply-Demand Imbalance Intensifies in Liangshan Southern Red Agate Production Area, Market Prices Face New Upward Pressure

Liangshan, Sichuan, October 26, 2023 – Recent mining activities in Sichuan's Liangshan region, China's primary production area for Southern Red Agate, have shown significant changes. The output of high-quality raw stones continues to shrink, a trend that is profoundly impacting the global Southern Red Agate market. Industry experts widely believe that as scarcity becomes more pronounced, the market price of Southern Red Agate is likely to enter a new upward cycle.

According to the latest information gathered by our reporter from the front lines of the Liangshan production area, mining difficulties have increased significantly in recent months. The discovery rate of high-quality, large-sized Southern Red Agate rough has sharply declined. A mine owner, who wished to remain anonymous, told our reporter, "It's more than twice as hard to find a piece of top-grade Southern Red material now than before. Many mining points are nearing depletion, and new veins have either not been discovered or come with extremely high extraction costs."

This phenomenon is not isolated. According to the latest market report released by the Gemological Association of China (GAC), the total output of Southern Red Agate rough in China in 2022 decreased by approximately 15% compared to the previous year. The decline in high-quality rough output in the Liangshan area alone exceeded 20%. This downward trend is expected to continue, and possibly accelerate, in 2023. The GAC report also indicates that despite robust market demand, the continuous tightening of the supply side is an undeniable fact.

"The scarcity of Southern Red Agate is the core driver of its value," noted Dr. Li Minghua, a renowned jewelry and jade appraisal expert and professor at the Gemological Institute of China University of Geosciences (Beijing), in an interview with our newspaper. "Liangshan Southern Red Agate is famous for its unique persimmon red, cherry red hues, and warm texture, highly favored by collectors and consumers. However, as a non-renewable resource, its extraction volume is inevitably limited. The current reduction in high-quality raw materials is a direct reflection of the market's supply-demand structural imbalance."

Market data shows that over the past year, the average wholesale price of Liangshan Southern Red Agate has increased by approximately 10%-15%, with top-grade exquisite pieces seeing increases of over 20%. With the further tightening of supply from the production area, it is anticipated that the overall market price of Southern Red Agate will continue its upward trend over the next 6-12 months, potentially rising by 5%-10%, with some rare categories possibly experiencing jumps of over 20%.

For consumers, this means the threshold for purchasing high-quality Southern Red Agate will further increase. For dealers and processors, the cost of acquiring premium rough will significantly rise, which will undoubtedly translate into higher retail prices. Some industry insiders predict that to cope with raw material shortages, some businesses may turn to optimizing the utilization efficiency of existing materials or exploring alternatives from other origins. However, for now, the unique status of Liangshan Southern Red Agate remains largely unchallenged.

Furthermore, the investment value of Southern Red Agate is increasingly prominent due to its scarcity. Professor Li Minghua advises investors to pay attention to the quality, craftsmanship, and origin of Southern Red Agate while monitoring market dynamics, avoiding blind speculation. He emphasized, "Genuine exquisite Southern Red Agate has immense potential for value appreciation, but the investment returns for ordinary materials are relatively limited."

Looking ahead, the mining management and market standardization of Liangshan Southern Red Agate will be crucial for the industry's development. How to meet market demand while protecting resources is a common challenge facing all industry participants. It is foreseeable that as high-quality resources become increasingly depleted, the collection and investment value of Southern Red Agate will further increase, and its market position will become even more stable.