Silver availability drops 49%, consumption goes industrial

Font Size

Print

Feedback

Email

Discuss

The country opened the year 2007 with a silver stock which was lower by 49% at 1,221 tonne compared to 2,373 tonne last year. This is because during the year 2006 legal imports fell sharply and sale of government silver was also lower.

Total legal imports were down to 500 tonne during the year as against 1,100 tonne in 2005, down by 85% while MMTC sold about 800 tonne of government silver (mint silver) during the year as against 1,100 tonne in 2005, down by 27%. The scrap supply was 40% higher at 700 tonne from 500 tonne in 2005. Thus total availability of silver during the year 2006 was 4,481 tonne as against 5,973 tonne during the previous year, down by 25%.

“Silver is fast becoming an industrial metal. There was a decline in demand for silver jewellery by over 33% to 400 tonne. The demand in investment and coins was much lower at 25%,” Mr Sanjiv Arole, a metal analyst told FE.

Total demand for silver fabrication was 3260 for 2006 as against 3,600 tonne during the previous year, down by 9%.

Despite higher prices, the demand for silver was sustained mainly due to industrial consumption that actually increased from 2,200 tonne to 2,260 tonne, up by 2% over previous year. Average price of silver rose by around 58% in 2006 to 17,554 per kg as compared to Rs 11,054 per kg over previous year.

“The silver demand could be sustained by the industrial demand that has its roots in the strong GDP growth. The robust economy, erratic monsoon and modest growth on agricultural production did help in maintaining silver demand to a certain extent. The 8% plus growth in GDP in spite of a mere 2.3% rise in agri-production appeared to give silver demand a boost,” Arole said.