For decades, shopping for uncut diamonds was a tightly scripted affair: First, persuade De Beers to add you to its list of handpicked customers. Then, 10 times a year, attend a week-long sale to buy exactly the amount De Beers offers you at whatever price it chooses.

The system, which works more or less the same at Russian rival Alrosa PJSC, gave the two miners a tight grip on their market. With the coronavirus wreaking havoc through the industry, that control is now disintegrating.

De Beers struggled to generate much interest from its customers to even look at this month’s diamond sale, despite bending over backward to attract purchases, according to people familiar with the matter. At Alrosa, at least five buyers have broken from their long-term contracts because they can’t make money under the current terms, said the people, who asked not to be identified discussing private information.

The lack of sales is likely to hit profits hard for the two biggest producers, although it probably won’t affect the price of diamond jewelry in stores. The rough-diamond trading freeze is also creating billions of dollars of stock buildup for the miners that threatens to undermine an eventual recovery in the market.

With jewelry stores closed, cutters and polishers stuck at home and global travel at a standstill, De Beers and Alrosa have made several concessions to their normal sales rules — allowing customers to renege on contracts and view diamonds in alternative locations. Crucially, though, they’ve refused to cut prices, in an attempt to shore up the market. That’s turned into a sticking point for many buyers.

While the biggest diamond miners are refusing to budge on prices, distressed smaller rivals are offering discounts of as much as 25%, meaning buyers who have limited demand are able to get the goods they need from them instead.

“De Beers and Alrosa are sincerely trying to protect value,” said Anish Aggarwal, a partner at specialist advisory firm Gemdax. “They are definitely trying to do the right thing, but the unprecedented economics of the current situation limits both buyers’ and sellers’ room to manoeuvre.”

Alrosa buyers are also protesting the company’s more-stringent enforcement of its contract, which requires customers to buy goods they’ve deferred, while De Beers has been more flexible.

Two buyers had their long-term contracts with Alrosa ended in April, the miner said on April 10. One of those was Diacore, the diamond-trading company owned by the billionaire Steinmetz diamond family and one of the most powerful middlemen companies in the industry, according to people familiar with the situation. Three more Alrosa buyers left in the last month, according to the people, including Antwerp-based Arjav Diamonds.

“Our sales policy received a robust support from our clients and other industry members,” said Alrosa chief of sales Evgeny Agureev. “The price stability is a key for many of our clients’ financial solvency, as it prevents the depreciation of their stocks,” he said.

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