Sales at Alrosa showed a strong recovery in the fourth quarter of 2020 amid holiday demand and a rise in activity at Indian diamond manufacturers.

Revenue from rough diamonds grew 29% year on year to $1.14 billion, the company reported Thursday, as a release of pent-up demand enabled the Russian miner to offload goods that had been unsellable earlier in the year. The company’s rough inventories fell by almost 10 million carats during the three months.

“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 and robust performance across all segments of the diamond market,” Alrosa said.

Retailers saw strong online sales during the US holiday season, while trading was busy ahead of the Chinese New Year, the miner noted. In addition, cutting factories in India returned to polished-production levels of up to 90% of capacity, rising to 100% in January, it added.

The average selling price of rough fell 38% year on year to $67 per carat, reflecting a larger share of small diamonds in the sales mix, as buyers had deferred their demand for these categories from earlier in the year. Sales volume more than doubled to 17 million carats, from 8.2 million carats in the same period of 2019. Production fell 20% to 7.1 million carats as the company continued to reduce output due to the market conditions.

The second quarter of 2020 saw a heavy slump in sales as the Covid-19 pandemic restricted trading throughout the diamond supply chain, with demand showing some improvement in the third quarter. Alrosa allowed contract clients to avoid purchasing their allocations of rough, causing inventories to reach 30.6 million carats as of September 30. 

However, with sales returning, the company was able to trim its stockpiles to 20.7 million carats as of December 31 — a 32% decrease compared with three months earlier, and an 8% year-on-year decline. Inventories haven’t been that low at the end of a quarter since June 2019.

Polished sales surged to $78.3 million for the fourth quarter, versus $27.8 million a year earlier, as the company acquired manufacturer Kristall and sold the 14.83-carat Spirit of the Rose for $26.6 million at Sotheby’s. Total diamond sales — encompassing rough and polished — grew 33% to $1.22 billion.

Rough sales for the full year dropped 19% to $2.65 billion, as the collapse in demand during the second quarter outweighed the second-half recovery. Revenue from polished more than doubled to $149.7 million from $64.8 million in 2019, with total diamond sales down 16% at $2.8 billion. Production slid 22% to 30 million carats.