Russia’s Alrosa (MCX: ALRS), the world’s top diamond producer by output, saw sales for rough and polished diamonds fall to $15.6 million in April, as the coronavirus pandemic continues to hit demand.
The figure stands in stark contrast to the $152.8 million the diamond miner fetched in March and the $405 million in January.
Deputy CEO, Evgeny Agureev, said restrictions to slow down the spread of the virus and a falling demand had reduced trade to a minimum. He said he hoped to see an upward trend in demand as early as the beginning of the third quarter.
Last week, the Russian state-controlled company decided to halt production at two of its mines, saying that extended lockdowns affecting key players in the supply chain, including polishers and top retailers, has worsened market conditions.
It also said it would offer options for online trade and relaxed payment terms for its contracts in March.
The diamond market began suffering from the affects of the covid-19 spread in early March, and measures to contain it have already pushed big and small miners over the edge.
The pandemic has already squashed diamond miners’ dawning hopes of a recovery in a sector already reeling from weak prices and demand since late 2018.
Canada’s Dominion Diamond Mines, the controlling owner of Ekati mine and a 40% partner to Rio Tinto in the Diavik mine, filed for insolvency protection in April.
Lucara Diamond (TSX:LUC), another Canadian company, posted last week a net loss of $3.2 million, or $0.01 a share, for the first three months of the year.
The figure was in sharp contrast with the $7.4 million in net income, or $0.02 in earning per share the miner reported in the same period last year.
South Africa’s Petra Diamonds (LON:PDL) has recently delayed interest payments to borrow $21 million in new debt, a crucial move to keep the company afloat.
Investment banks are increasingly reluctant to extend credit to diamond producers, as inventory is not being sold and defaults are possible, analysts have warned.
“We are concerned about oversupply of rough diamonds following the reopening of economies, as a lot of inventory could potentially be flooded into the system and the market might not be able to absorb all of it, resulting in increased pricing pressure,” Citi said in an early May note.