Silver import up 60%, to cross 5,000 tonnes

Import of silver has risen this year. It had reached 4,200 tonnes till October, 60 per cent higher compared to the same period in 2016, according to Thomson Reuters GFMS. And, it is likely to likely to end the year with 5,000 tonnes.

Restocking after last year’s fall and demand from industry led to the rise and “with overall improved consumption sentiment and improving rural India, we expect import demand next year to rise further by approximately 10 per cent”, said Sudheesh Nambiath, regional lead analyst for GFMS.

Import fell significantly in 2016 to 2,794 tonnes, from an all-time high of 7,955 tonnes in 2015. Says Viraj Didwani, Director at Foresight Bullion India, one of the large silver importers and wholesalers: “After demonetisation, dealing with cheques is catching up; we see dealers/jewellers in even smaller towns have also shifted to banking channels for silver buying.”

As a result, unaccounted silver flows are largely from customers who sell silver jewellery or bars back to jewellers and insist on cash. The wholesale business has reportedly moved to cheques.

Chirag Thakker of the Ahmedabadbased Amrapali group, said: “Industrial demand is also better. Investment demand is down, as people are more bullish on the equity market this year.”

Both Didwani and Thakker believed demand will be more price-sensitive in 2018. The (Washington-based) Silver Institute said in its 2017 interim report that, “The price has averaged $17.16/oz so far this year. For the year as a whole, the GFMS team at Thomson Reuters forecasts the price to average $17.13/oz, marginally lower than the 2016 annual average of $17.14/oz.”

And: “The market is expected to switch to a small annual physical surplus of 32.2 million oz in 2017, after posting annual physical shortfalls for four years. Total silver supply is forecast to remain broadly flat in 2017, standing at 1,008.4 million oz, Total physical demand is forecast to drop by five per cent in 2017, to a total of 976.1 million oz, led by a sharp fall in retail investment, although an upturn in silverware demand and a modest recovery in jewellery and industrial fabrication should help to offset some of that.”

Globally, silver demand for investment is expected to fall to 130 tonnes, from 205 tonnes in 2016. In India, says Nambiath, “Net investment demand was dull through most of the year. However, it managed to increase significantly during the Diwali week in western and northern India, where some dealers have reported that sales were 30-40 per cent higher than last years’ Diwali week. But, overall investment demand this year will increase over last year; 2016 physical bar demand was the lowest in four years.”