Indian silver imports top 100 million ounces in first five months of 2018.
India imported 3,128 tons (100,567,536 ounces) of silver through May 2018.
While Indian gold imports dipped about 15% through May 2018, India silver imports have risen 35% during the same time period. Indian silver imports have averaged over 625 tons (20.1 million ounces a month!) If Indian silver imports continue at the pace of the first five months, India will import well over 7,500 tons of silver this year.
India imported 839 tons of silver in May.
India’s love affair with gold is legendary. India imports hundreds of tons of gold a year and it is estimated that Indian households and temples have over 22,000 tons of gold! India, however, is making its mark on another precious metal – silver. Over the last ten years Indian silver imports have climbed steadily. Since 2013, Indian silver imports have averaged over 6,100 tons annually, an increase of 118% over the period of 1999-2012 when Indian annual silver imports averaged about 2800 tons. In 2015, Indian silver imports accounted for about 1/3 of annual silver mining production!
India has virtually no domestic gold mining production and little silver production. As a result, India relies extensively on imports and secondary supply to meet its precious metals demand.
Indian silver demand has increased due to a number of factors.
1. Industrial Demand
Indian is an emerging industrial powerhouse. In recent years, India has become one of the world’s leading manufacturer of electronics. Silver is used in the production of cell phones and other electronic devices and computers. Last month, India announced the opening of the world’s largest phone factory that will make cell phones for South Korean conglomerate Samsung.
2. Gold Import Duty
The Indian government has placed import duties on gold, added a sales tax and initiated a gold monetization scheme designed to get Indians to turn in their gold to in exchange for interest bearing bonds. While the Indian government’s anti-gold initiatives have dented official gold demand in India, black market sales and imports continue. Silver has been a direct beneficiary of the campaign against gold. Indians prize silver for its beauty and also give it as gifts. It’s not substitute for gold but it is viewed favorably.
Annual Indian Silver Imports 2007 -2018
3. An Increasing Middle Class and Jewelry, Silverware & Investment Demand
Estimates of the size of the Indian middle class range from about 250-350 million people or approximately the same size of the entire population of the United State. Relatively wealthy Indians have driven up demand for silver jewelry, silverware and silver coins and bars. When price of silver hit multi year lows in 2015, Indian silver imports hit a record high.
Indian Silver Imports June 2014 – May 2018
4. Solar Demand
In addition, there are many solar energy projects under way in India that require silver for the construction of solar panels. India’s silver requirements for its solar industry are estimated to be in the tens of millions of ounces a year. India recently completed the world’s largest solar production plant.
5. Low Silver Price
Indians tend to acquire more gold and silver when the price is falling than when the price is rising. India’s record year of silver imports was in 2015 when the price of silver reached a multi-year low. Silver imports fell off in 2016 as the price of silver rose. This year, silver imports are elevated in part due to falling silver prices. The price of silver is down about 11% in 2018 through early August.
Indian Silver Imports vs. Global Silver Mining Production
To put India’s demand in context, India imported about 273 million ounces of silver in 2015. This is about a third of the approximately 850 million ounces of silver mined in the world in 2015. India’s silver demand shows no signs of abating. In March 2018, India imported 504 tons or approximately 16.2 million ounces of silver, which is nearly equivalent to the 18 million one ounce American Silver Eagle coins the U.S. Mint sold in 2017.
In May 2018, India imported 839 tons (approximately 27 million ounces) of silver.
The 1,387 tons (44.6 million ounces) of Indian silver imports in the first quarter of 2018 were roughly equivalent to the record 47 million one ounce American Silver Eagle coins sold in 2015.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.