Silver Demand, Silver Import, Metal Focus: In its latest India Focus Monthly report, Metal Focus has revealed a noteworthy surge in silver imports by India, hitting 1,829 tons in October 2023, nearly double the previous year’s figure. This substantial increase represents the highest monthly import recorded since 2008, signaling a noteworthy recovery from the sluggish performance observed in the first nine months of the year. The forecast anticipates that India’s total silver demand in 2023 will experience a significant decline, exceeding 40% compared to the previous year.
The surge in October imports, primarily driven by aggressive restocking for the upcoming wedding and festive season, has encountered headwinds due to the sharp recovery in silver prices, potentially resulting in a slowdown in momentum throughout November. Metal Focus anticipates a substantial month-on-month deceleration.
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Fresh regulatory uncertainty has played a pivotal role in the import dynamics, leading to a stall in silver imports in the UAE. Discussions with industry experts during Metal Focus’ recent visit to the UAE uncovered that regulatory ambiguities were a significant factor contributing to this slowdown.
Contextualizing the October surge, the record-high imports contrasted starkly with notably weak silver imports in the preceding months. Year-to-date imports up to September were modest at 900 tons, in stark comparison to over 8,000 tons during the same period the previous year. This year’s Q1-Q3 total also fell significantly below the five-year average of 4,320 tons.
While October’s robust import figures suggest a combination of aggressive trade restocking and a recovery in consumer demand, the industry estimates an unprecedented 3.5 million weddings in November and December, further driving the surge in demand.
Looking ahead, Metal Focus suggests that despite potential consumer demand recovery, silver imports may not witness significant improvement unless prices ease or volatility subsides. The report forecasts that India’s total silver demand in 2023 will be over 40% lower than in the previous year.
Traditionally significant silver suppliers to India, such as the UK, China/Hong Kong, and Singapore, have seen a shift due to the Comprehensive Economic Partnership Agreement (CEPA) signed with the UAE in 2022. This agreement reduced the import duty on silver from 10% to 9% in 2023, compared to the standard Indian import duty of 15% outside the CEPA.
Despite the positive impact on the UAE’s share as a silver supplier, recent regulatory uncertainties have resulted in a decline. While the UAE accounted for over 50% of imports in August and September, it dropped to just 7% in the latest figures. Metal Focus attributes this decline to uncertainties stemming from regulatory issues.
Crucially, Metal Focus highlights that the lack of clarity in customs clearance procedures related to the concessional duty under CEPA could create uncertainty for industry players in Dubai. This issue may also have wider implications, affecting the expansion of silver refining capacity in Dubai and potentially impacting the import of other metals into India, particularly the PGMs, which follow a similar import structure.
