India will import around 300 tonnes of silver in September to meet heavy demand triggered by falling prices and forthcoming festivals, and consumption should remain strong until the end of the year, a trade body said. In a sign of just how much retail purchases have picked up, India bought just 56 tonnes in the seven months to July-end.
International silver prices were at $10.93 an ounce on Monday, down from about $19.45 on July 13, due to a fall in crude prices and dollar volatility. "By the month-end we are getting some 15 containers of silver, which is equal to 300 tonnes. After that, demand will probably slow down a bit," Suresh Hundia, president of the Bombay Bullion Association, told Reuters on Monday.
Silver demand has surged on lower prices and as Indians prepare to mark a series of religious festivals.India's annual silver imports are estimated at more than 3,000 tonnes. Dealers said local demand for silver was so high ahead of Diwali, the Hindu festival of lights next month, they were only able to meet a fraction of it. It is considered auspicious to buy or gift silver coins and utensils ahead of the festival.
"I am able to sell only about 500 kg (1,100 lb) of silver daily, though the demand is for about five tonnes daily. The supply of metal is extremely thin," said Rajesh Jalan, a Kolkata-based bullion dealer.
Hundia said that after the drop in prices demand had surged to the extent traders were importing small quantities by air. Retailers were willing to pay a premium of 25 cents an ounce on silver imported by air as delivery time is slashed, he said. Hundia added demand for silver may cool after the arrival of the ocean-freight silver in September, but was expected to remain strong for the rest of the year. Consumers were rushing to buy silver ahead of Diwali expecting international prices may start hardening over the next month on a weakening dollar.
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