(Bloomberg) -- The crisis squeezing the diamond industry is gaining momentum.
De Beers reported another sharp drop in its latest sales to the lowest since 2015, after the world’s biggest producer allowed its struggling customers to defer more purchases to later this year.
The mostly family-run businesses that cut, polish and trade the world’s diamonds are battling to make a profit as demand slumps because of a surplus of polished stones and as demand for high-end jewelry stagnates. It has also become harder for these companies to access financing.
De Beers sells gems at 10 sales a year in Botswana to a select group of customers, who are expected to accept the price and quantities they’re offered. Membership of the group was once a lucrative coup for anyone in the industry, but some buyers are now struggling to make money as De Beers keeps prices high, even if it means selling fewer stones.
The company, a unit of Anglo American (LON:AAL) Plc, had already loosened the rules by letting its customers lower their annual quotas and defer purchases. It also trimmed production plans earlier this month as it seeks to match supply with weaker demand for rough diamonds.
“De Beers Group provided customers with additional flexibility to defer some of their rough diamond allocations to later in the year,” Chief Executive Officer Bruce Cleaver said in a statement Tuesday. “As a result, we saw a reduction in sales.”
De Beers sold just $250 million of rough diamonds in its most recent offering, down 53% from a year earlier and the lowest since the 10th sale of 2015, according to the company’s reports.