India imported 9,450 tonnes of silver in the 2022 calendar year, the country’s highest ever annual imports. The previous high for silver imports was 8,093 tonnes in 2015.
The reasons for high imports last year are multifold: Pent up demand from industry after lockdown years, restocking by jewellery and silverware fabricators, and good investment demand when the prices were low.
Most imports took place in the second half of the year when prices fell below Rs 55,000 per kg in the country — with July witnessing highest-ever monthly import of 1,700 tonnes.
“Silver demand rebounded after lean years of 2020 and 2021. In those years, even the stock with fabricators was low. And hence, they were re-stocking silver when prices were low,” said Chirag Sheth, principal consultant, south east Asia for London-headquartered metal research firm Metal Focus.
“In 2022 when silver prices fell, silver fabricators were having their order book full for four months,” Sheth added.
From July to October, nearly 4,700 tonnes of silver is estimated to have been imported. Also in 2022, domestic supply was around 700-750 tonnes and demand was estimated to be 9,000 tonnes.
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Chirag Thakkar, director, Amrapali Gujarat, said, “In 2022, demand was well spread and the revival was seen in all major segments like industry, jewellery and artefacts and investments.”
According to him, electrical and solar panel makers had a big share in industry demand, at 40 per cent of the total industry of that of the industry.
Rajkot is a hub for electric switch-making industry and 10 per cent of India’s total silver demand is estimated to have been consumed by the Gujarat city alone.
Furthermore, among the overall demand components, 40 per cent silver is estimated to have been consumed by industry, 30 per cent by investors and rest by silver jewellery and silverware/artefacts makers.
Thakkar said that in the silver jewellery and in silverware segments, payal and dinner sets, respectively, are among the most running items (in demand from retail consumers).
Going forward, it remains to be seen how 2023 will be for the metal.
Sheth says that as prices are up sharply — by nearly 30 per cent from lows of August 2022 —demand has fallen.
Illustration: Binay Sinha
Some profit-taking is already happening at higher levels which is also resulting in the market price quoting at a discount to the cost of imports.
Experts also say that some of the silver imported at lower prices was sold in the market by traders. As a result, as supply increased and demand slipped, silver is quoting at a discount of 50 cents per ounce (or Rs 1,250 per kg) in the open market. Market players don’t see demand recovering in near the future if prices stay high.
Experts also point to the past trends, which suggest that after a year of record imports there is usually a fall.