MOSCOW – Russian State-controlled diamond producer Alrosa sees strong global demand for diamonds in the first quarter of 2021 after its sales fell by 4% to 32.1-million carats in 2020 due to the coronavirus pandemic, it said on Thursday.

Alrosa, the world's largest producer of rough diamonds, which competes with Anglo American unit De Beers, reduced 2020 production by 22% to 30 million carats as it suspended mining at less profitable mines.

"By the end of the year, demand for rough diamonds was strong and stable, driven by a balanced sales policy of major diamond producers seeking to meet real demand, along with a seasonal uptick in demand," Alrosa said.

The company along with its global peers focused on a "price-over-volume" strategy in 2020 to speed up the reduction of stocks in the cutting and polishing sector, the majority of which is located in India.

This sector is increasing its production now as jewellery businesses seek to replenish their inventories and due to market activity ahead of the Chinese New Year, it added.

Alrosa's 2020 sales revenue fell by 16% to $2.8 billion.

"Despite almost zero sales in the middle of 2020, Alrosa's 2020 sales look better than they could have been due to a strong fourth quarter," Artem Bagdasaryan, an analyst at BCS, said.

Global sales of luxury goods may show a growth of 10-20% in 2021 after their 23 percent drop in 2020, Alrosa told Reuters, citing an estimate of Bain consultancy.

If this forecast turns out to be correct, the diamond jewellery sector may show a similar dynamic, the miner said.

In mid-2020, the Russian government said it was considering buying some of Alrosa's diamonds to support it.

"At the moment, the market conditions allow us not to consider this option for the company yet. But we understand that such an option is available in case there is a need for it," Alrosa said.