The silver lining: India’s imports hit a record 9,450 tons amid rebounding demand

India imported 9,450 tons of silver in 2022, the country’s highest ever annual import. The previous high for silver imports was 8,093 tons in 2015.

The reasons for the rise in imports last year are manifold: pent-up demand from industry after years of lockdown, restocking by jewelry and silverware manufacturers, and good investment demand when prices were low.

Most of the imports occurred in the second half of the year when prices fell below 55,000 rupees per kilogram in the country – July saw the highest ever monthly imports of 1,700 tonnes.

“Silver demand has rebounded after the lean years of 2020 and 2021. In those years, even inventories with manufacturers were low.

Hence, they would restock silver when prices were low.

“In 2022, when silver prices fell, silver manufacturers would fill up their order book for four months,” Sheth added.

From July to October, it is estimated that approximately 4,700 tons of silver were imported. Also in 2022, the domestic supply was between 700-750 tons, and the demand was estimated at 9,000 tons.

Chirag Thakkar, Director, Amrapali Gujarat said, “In 2022, demand has spread well and recovery is seen in all major sectors like industry, jewellery, handicrafts and investments.”

According to him, makers of electric and solar panels have a large share of industry demand, accounting for 40 percent of the industry’s total industry.

Rajkot is the center of the electrical switch industry and it is estimated that the city of Gujarat alone has taken up 10 percent of the total demand for silver in India.

Further, out of the components of aggregate demand, it is estimated that 40 percent silver was consumed by industry, 30 percent by investors and the remainder by makers of silver jewelry and silverware/crafts.

Dhokkar said that in the silver jewelry and silverware segments, payment and dinner sets, respectively, are among the top-run items (requested by retail consumers).

Moving forward, it remains to be seen what 2023 will be like for the metal.

As prices have risen sharply — by nearly 30 percent from their August 2022 lows — Sheth says, demand has fallen.

Illustration: Binay Sinha

Some profit-taking actually occurs at higher levels which also results in pricing the market price at a discount to the cost of imports.

Experts also say that some imported silver at low prices was sold in the market by merchants. As a result, as supply increases and demand decreases, silver is priced at a discount of 50 cents per ounce (or 1,250 rupees per kilogram) on the open market. Market players do not see demand recovering in the near future if prices remain high.

Experts also point to previous trends, which indicate that after a year of record imports, there is usually a decline.

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