Giants De Beers and Alrosa have seen their sales of rough diamonds plummet since the outbreak of the coronavirus epidemic in China. The industry has barely recovered from a difficult year in 2019.

Diamond is not resistant to coronavirus. In February, sales of rough stones by the giant De Beers in Botswana, the market barometer, amounted to $355 million, a 28% drop over a year. Compared to January, the value of sales even fell by 35.6%. The fault lies with the Covid-19 virus, says group CEO Bruce Cleaver: “After an improvement in demand for rough diamonds in the first sales cycle of 2020, we recognize the impact of the virus on customers focused on supplying the Chinese market.

The collapse in sales in the former Middle Kingdom, one of the drivers of the diamond market, is taking the entire industry with it, from mining groups to jewellers to the middlemen who cut and polish gemstones. De Beers, as part of Anglo American, had granted exemptions for orders destined for the Chinese market. This is a rare occurrence in the mining group’s highly regulated sales system.

China, 14% of demand

Same trend for the great rival, the Russian Alrosa. The mining giant warned that it had disposed of fewer stones in February than in January. But thanks to a growing US market, Alrosa will not do worse than in the first quarter of 2019, a bad year. “There is no panic among our customers,” tried to reassure Evgeny Agureev, the group’s number two. “Apart from China and Hong Kong, which account for only 14% of global demand, the markets are stable,” he added.

This should come as no surprise, and the next cycles could remain weak,” warn Deutsche Bank analysts. However, the German bank’s experts are not alarmist: “While this double dip is negative, mid-stream stocks are at lower levels compared to last year’s levels and those before the slowdown in 2015.

Nevertheless, this epidemic comes at the worst possible time for the sector, which had not yet recovered from 2019, a delicate year for all actors. The price of stones has fallen to historically low levels, and margins have crumbled against the backdrop of a financing crisis throughout the mid-stream in India and massive destocking.

The behemoths De Beers and Alrosa are strong enough to withstand the coming downturn, but the other mining groups are under high pressure on the stock market. Last week, Petra Diamonds hit an all-time low, Lucara Diamond fell to its lowest level in 7 years. Firestone, which is struggling to produce stones, announced a few days ago that it would withdraw from the London stock exchange.