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India silver imports seen extending rebound from four-year low

15th December 2017

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MUMBAI – Silver imports by India, one of the world’s top buyers, may keep rising next year after bouncing back this year from a four-year low in 2016, boosted by weak prices.

Overseas purchases are estimated at as high as 5 500 metric tons in 2017 and may rise to about 6 000 t next year, surging from 3 000 t in 2016, according to Chirag Sheth, an analyst at London-based Metals Focus, an independent precious-metals research firm.

“We are surprised by the recovery,” said Sheth, who had expected a contraction in purchases at the start of the year. Shipments rose amid a rush to import more silver ahead of the implementation of the new goods and services tax in July, he said.

Demand suffered last year after Prime Minister Narendra Modi clamped down on the black market. The drop in prices spurred by the GST has turned the tide for silver this year with demand seen rising about 7% to 5 338 t in 2017 and 5 592 t in 2018, Sheth said.

Futures in Mumbai have slumped 5.3% this year to around 37 000 rupees ($575) a kilogram. Prices are set for a fourth year of losses in five years. India imports most of its silver, from places including the UK, mainland China and Hong Kong. Locally, Hindustan Zinc produces about 450 t annually.

“There has been a consistent improvement in the market, with visible improvement in the jewellery segment and the silverware segment,” Sheth said by phone from Mumbai. “Where it still continues to disappoint is the investment side and that is also testament to the fact that silver prices have not gone anywhere.”

Edited by Bloomberg

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