INDIA July 06 2017 11:33 AM

MUMBAI (Scrap Register): India’s silver imports rose sharply over the first five months of 2017 but the pace of buying may not be sustainable, said Metals Focus. 

After a weak 2016, imports over the first five months of this year surpassed 2,000 tons, up some 40% year-on-year. June imports could be 600 to 700 tons, taking first-half imports to around 3,000 tons, which would nearly match 3,100 for all of 2016, the consultancy added.

“However, the question remains as to whether this trend can be sustained during H2, something we believe will be difficult to achieve,” said analysts at Metals Focus.

A disconnect may have emerged between the Indian physical market and the volume of imported bullion, analysts explain. Jewelry and silverware offtake have risen but investment demand has continued to struggle. 

Metals Focus suggested that physical demand was not behind the jump in imports, but the rise instead was tied to introduction of the goods and service tax, with restocking by bullion dealers ahead of time in order to meet any increase in demand in the second half of the year. 

“As a result, we would expect to see some import normalization in the coming months,” Metals Focus said. “We therefore estimate some 1,500-2,000t of silver will be imported during Q3 and Q4, taking total imports for 2017 to around 4,500-5,000t.”