(Kitco News) – India imported a record amount of silver in February, with silver imports surging 260% during the month, according to government and industry sources.
The country imported a record 2,295 metric tons of silver during the month, more than tripling the 637 tons recorded in January. India is the world's biggest silver consumer, and with imports of the gray metal now on pace for a 66% year-over-year increase, the demand could help catalyze the nascent silver breakout.
The outsized imports were supported in part by lower duties which spurred larger purchases from the United Arab Emirates (UAE). India imported 939 tons from UAE in February, representing 41% of the monthly total, as traders bought large volumes to benefit from a lower duty, the official said.
According to provisional data from India’s Ministry of Commerce and Industry, silver imports rose to 2,932 tons in the first two months of 2024 compared to 3,625 tons for the entire year of 2023.
"Indian imports are cyclical in nature. In one year, imports may be very high, and then the following year they may fall," said Chirag Thakkar, CEO of Amrapali Group Gujarat. “Since imports fell in 2023 after record buying in 2022, we can expect imports to pick up in 2024.”
Thakkar said India's imports could rise as high as 6,000 tons in 2024, up from 3,625 tons in 2023, driven by robust demand from the fabrication and solar industries.
He added that people were also buying silver as an investment, believing it will outperform gold.
India’s jewelry sector has seen upward revisions throughout the new year amid higher prices for precious metals. ICRA Limited, a Moody’s affiliated investment information and credit rating agency, said in February that rising gold prices are boosting India’s jewelry consumption, which could be as much as 50% higher than the initial projections for 2024.
“ICRA has revised upward its forecast of the year-on-year (YoY) domestic jewellery consumption growth (in value terms) for FY2024 to 10-12% from 8-10% estimated earlier, primarily driven by the rise in gold prices,” wrote ICRA Vice President Sujoy Saha and Senior Analyst Raunak Modi in the report.
The authors project jewelry consumption to rise by “more than 15% YoY in H1 FY2024, aided by stable demand during Akshaya Tritiya and higher gold prices.” They then predict the growth rate will moderate to 6-8% in the second half of the year due to ongoing weakness in rural demand due to persistent high inflation.
In January, India raised the import duties on gold and silver findings, coins, and spent catalysts containing precious metals to 15%, up from 10% previously. A Finance Ministry official said at the time that the move was made to prevent importers from circumventing the higher duty on gold and silver bars after they noted a surge in imports of gold findings over the last two months.
‘Findings’ are small components such as hooks, clasps, clamps, pins, catches, and other fasteners used to assemble jewelry.
