Gold demand falls below 700t, recycling rises 37% last year Centre may offer imported onion at `20/ kg to states IOC net triples on inventory gains

PSU bank staff on 2-day strike from today

Operations of public sector banks are expected to be hit from today as unions will go on a two-day nationwide strike following the failure of wage revision talks with managements. However, private sector lenders like ICICI Bank and HDFC Bank would be operational. Many banks, including SBI, have informed customers that operations may be impacted.

Higher prices and weak rural economy brought down gold demand below 700 tonnes in 2019. Recycling went up 37 per cent, while import dropped 14 per cent during the year and the grey market continued to be robust.

In 2019, the gold demand stood at 690.4 tonnes compared to 760.4 tonnes in 2018- a drop of 9 per cent, as per the World Gold Council data. The market saw the demand coming below 700 tonnes last time in 2016 to 666 tonnes when the excise duty hike and demonetization hit the sentiments. Before that, the demand fell to 642 tonnes a decade back in 2009. Usually, India’s gold demand hovers around 800 tonnes.

“The gold price hike in the second half of the year saw demand coming down by 22 per cent against 7 per cent increase in the first half. Besides, the rural economy was down and slower income growth hit the buying capacity of the consumers,” said Somasundaram P.R., managing director, India, World Gold Council.

Jewellery demand was down by 9 per cent at 544.6 tonnes as compared to 598 tonnes and investment demand declined by 10 per cent to 145.8 tonnes in comparison to 162.4 tonnes in 2018.

In fact, demand in all the key gold consuming markets were down except Egypt and Turkey and China saw the demand falling by 15 per cent, he added.

However, WGC expects the demand to rebound in 2020 to 700 – 800 tonnes. Meanwhile, the grey market remained active and the quantum of smuggled gold went up from 9095 tonnes in 2018 to 115-120 tonnes in 2019.

Sensing rotting of perishable kitchen item at various ports in the country due to no takers for the government-imported onions at the current prices of Rs 58/kg, the Centre is likely to offer it at a highly subsidised rate of Rs 20-23/kg, down over 6065 per cent from the current offered rate. The prices of these onions will also be fixed depending upon the demand and consumption at various states.

As per a government source, “Despite persistent requests made by the government to lift the imported onions at an affordable price, many states withdrew their orders due to lack of perspective retailers who can sell off in mandis. As there were no prospective takers, MMTC, which had placed orders for import of 40,000 tonnes, finally purchased only 14,000 tonnes, while there are also large quantities of imported onions still lying unsold at various ports.”

“Maharashtra state among all other states also did not show interest to lift the commodity at high rates at a time when retail prices started cooling down on arrival of fresh crop. The retailers also claimed that consumers don’t like the taste of these onions much as compared with homegrown ones,” the source added.

“The government is also luring Nafed, Mother Dairy and other state governments to lift the imported onions at Rs 20-23/kg for distribution in several mandis,” the source said.

The government was forced to import onion in a bid to contain prices, which have cooled down now to around Rs 58-60/kg from the peak of over Rs 160/kg in the last few months.

To check spiralling onion prices, the government had in November 2019 decided to import 1.2 lakh tonnes of onion through state-run MMTC. Since then, MMTC has been able to purchase 14,000 tonnes of onion from the overseas market.

With better operating income, India's largest oil retailer Indian Oil Corporation (IOC), on Thursday, posted a 315 per cent jump in its third quarter standalone net profit at Rs 2,339 crore against Rs 563.4 crore in the previous quarter and Rs 716.82 crore in the year-ago quarter.

Announcing the results, IOC chairman Sanjiv Singh told reporters that inventory gains offset lower refinery margins and forex losses.

The PSU had an inventory gain of Rs 1,608 crore in the December quarter compared to an inventory loss of Rs 8,523 crore in the year-ago quarter. Net refinery margin stood at $2.15 per barrel.