India predicted to import 5000 tonnes silver in 2012, price to exceed $60/oz
Demand for the white metal in India is seen surging this year from last year's 4,800 tonnes and prices are expected to shoot up as a result says the Bombay Bullion Association.
Posted: Thursday , 23 Feb 2012
MUMBAI - -
Silver prices in India are set to surge to $2,033 (Rs 100,000) a kilo (over US$60/ounce) in 2012 given the uncertain global economic situation, according to an official of the Bombay Bullion Association, an apex traders body that deals in gold and silver. The world's largest importer of silver, India, could well import 5,000 tonnes this year as compared to about 4,800 tonne in 2011, the official pointed out.
"India is one of the largest users of silver and is ranked third in the world after USA and Japan. With average silver imports per annum of around 3,100 tonnes, the country's imports jumped to 4,800 tonnes in 2011. The previous year, India imported just 2,800 tonnes,'' said Jitendra Jain of the Association.
He added that though lots of silver was bought last year by retailers and investors, "imports of gold too were heavy. However, this year, gold imports are set to decline for the first time in three years and could well be way below 900 tonnes.''
Manubhai Shroff, bullion retailer added, "India's gold imports were valued at $29 billion in 2011 and were expected to cross $40 billion in the coming financial year. The recent import duties hike has however dampened demand and resulted in a decline. Silver has got much support though despite the duty hikes.''
On Thursday, spot silver rates for 1 kilo of silver in the Mumbai market was trading at $1181 (Rs 58,075) - US$36.73 an ounce. Shroff noted that the price could well rise in the coming months and shoot up with a good monsoon season.
India could import 300 tonnes of silver during the quarter, said Prithviraj Kothari, president of the Bombay Bullion Association. Though the country registered a 30% fall in silver imports in May 2011, demand is seen as surging this year and prices are expected to shoot up, he added.
Silver prices in India have more than doubled in the last two years. Kothari said investors are intent on selling silver with every small jump and eager to book a profit. Despite the high prices of silver, Kothari added the consumption of the metal has been rising in India.
India produces around 7.3 million ounces of silver a year (206.95 tonnes). Appetite for the white metal predominantly comes from rural buyers, with normal monsoons boosting crop production with a consequent benefit to incomes.
Around 50% of imports come from China, while recycling makes up some of the supply of the metal. Traders said Indian investors are keen to buy more silver to hedge market losses, since silver is proving to be an ideal investment tool. Though the weak global economic data may dampen the outlook for silver's industrial use, traders said inflation concerns in India are set to bring in more investors.