LONDON – An ugly year for diamonds in the vital US market is piling pressure on Europe’s historic center of the $80-billion global trade.

Diamond trading companies in the Belgian port city of Antwerp, which has been the industry’s trading capital for five centuries, were already feeling the pinch from a tightening credit bubble and thin margins. That’s now being compounded by falling demand from some of the industry’s biggest customers, notably retailers Signet Jewelers and Tiffany & Co.

“Some of the major retailers have been exerting significant buyer power on diamond companies over the last few years,” said Anish Aggarwal, a partner at consultant Gemdax in Antwerp. “If a diamond company becomes too dependent on such retailers, they can get very exposed.”

The US is the most important market for diamonds, buying more than half the world’s gems, and has been a bright spot for the industry in the past six years as wage growth, job creation and a strong stock market helped boost consumption. Yet that growth has stuttered so far this year. Signet, an industry bellwether, reported a 12% drop in first-quarter sales, while Tiffany’s figures also disappointed.

The mounting pressure on Antwerp’s diamond traders came to a head for one of the industry’s leading names last month when Belgian bank KBC Group seized assets belonging to manufacturer Exelco, which supplies diamonds to Signet in both the US and UK, as it tried to recoup debts of €26-million. Last week, a Belgian court ordered that the seized goods should be returned.

“There has to be a rationalisation,” said Erik Jens, head of diamond banking at ABN Amro Bank. “There was too much easy finance and that created a bubble, that bubble is now deflating.”

Consultant Bain & Co. has estimated the average cutting and polishing firm had no profit margin in 2015, compared with profits of as much as 4% in 2013. Fragmented diamond midstream companies, many of which are family run, lack buying and selling power with both their suppliers and customers, said Aggarwal.

At the same time, two leading lenders, Standard Chartered and KBC’s Antwerp Diamond Bank are exiting the business. Financing to the industry has fallen from about $16-billion to about $13-billion.

“The industry in general has had to adapt from a constant flow of goods with a high margin to a very competitive, more volatile market,” said Jens of ABN, which is one of the biggest lenders to the industry. “That’s a lot to deal with for a lot of companies so no wonder there are casualties.”