Investment demand will drive India’s silver imports to record high
India’s silver imports are set to triple in 2022 from a year ago to record highs after prices fell to 2-year lows, prompting investors to bet the metal was ready for a rebound and could outperform gold in the years to come.
Higher demand in India, the world’s largest consumer of silver, could support global prices.
“Investment demand has boosted imports,” said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer. “Investors expect poor man’s gold to beat gold in the years to come.”
India’s silver imports in 2022 could reach a record 8,200 tonnes, Thakkar said.
In the first seven months of 2022, silver imports jumped to 5,100 tonnes from just 110 tonnes in the same period a year ago, according to provisional data from the Ministry of Commerce and Industry.
In 2020 and 2021, Indian investors and industry sold silver stocks after strong imports in 2018 and 2019, Thakkar said.
“Destocking has depleted available stocks in the country. At current prices, traders are investing. As silver is not available in the country, imports are increasing,” he said.
India’s silver imports in 2020 and 2021 were 2,218 tons and 2,773 tons respectively, compared to 5,969 tons in 2019.
Local silver futures were trading at around 57,900 rupees per kilogram on Wednesday afternoon after hitting a record high of 77,949 rupees in 2020.
Investors like Umesh Patel, who bought two silver bars this month, think prices have corrected too much and will rebound soon.
“Silver is underperforming against gold. Hopefully it will rise strongly like 2009 to 2011,” said Patel, who had received over 200% return from silver over the course of the period.
Along with investment demand, imports have also increased due to growing industrial use, said a Mumbai-based dealer with a leading silver import bank.
“Electronics and solar panel manufacturing have increased due to government incentives. These industries are consuming more and more money along with the automotive industry,” the dealership said.
India offers production-related incentives to local and foreign companies to manufacture electronics and solar panels in the country.
The country meets most of its silver needs through imports, mainly from Hong Kong, the United Kingdom, China and Russia.
Rising demand has allowed banks and bullion traders to charge premiums of up to 30 cents an ounce over world prices, while gold is trading at a discount, a bullion trader says based in Mumbai with a private bank.
“Last year, gold was trading at a premium and silver at a discount. Today, the exact opposite is happening,” the dealer said.
(Reporting by Rajendra Jadhav; editing by Gavin Maguire and Gerry Doyle)
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