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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 09/03/2008 : 19:38:49
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Silver importers enter just-in-time mode
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MUMBAI: Amid volatile prices and slow demand, banks have reduced their silver imports. The metal is currently being imported purely on the basis of need as high costs make it logistically unviable to store.
Festival demand is just picking up and depending on the urgency banks are charging customers a premium of anywhere between 20-25 cents an ounce for silver.
ScotiaMocatta India managing director (bullion) Rajan Venkatesh said that demand for silver has been extremely dull over the last one year and has only started picking up in the last few weeks. “A major deterrent has been the prices, which hit the psychological mark of Rs 25,000 per kg levels (in May 2008),” he said.
However, with prices falling over the last few weeks, he indicated that there has been an upswing in demand and enquiries have been coming in. As the price has been volatile, banks are preferring air shipments to sea shipments as it is much faster.
Between the months of January and July 2008, India’s imports were lacklustre at only 54 tonne. However, with the price of silver declining by 15% in the last month, the demand has started picking up.
Government agency MMTC has imported about 38 tonne of silver for the month of August, and all of it is demand based, MMTC officials said. The agency had not imported any silver in 2007. Bombay Bullion Association president Suresh Hundia said that up to the last month banks were only knocking off their existing stocks. He unofficially estimated that imports were stepped up in August to around 100 tonne.
Banks have been cautious in their imports, as the suppliers charge an interest per month (nominal at about 1.25% per annum, but amounts to a substantial amount as import volumes are usually large), if they are not able to sell the stock.
An ICICI Bank dealer indicated that they have imported about 40 tonne since April 2008, and is only selling its inventories. “We have not imported silver in August, and demand is just about picking up. We are selling existing stocks,” he said.
Besides, when the price moves up sale of scrap silver also increases. The spot rate for silver in Mumbai was Rs 21,005 per kg on September 2. In the international market, it has declined from $15.32 to $12.50 an ounce in the past month. Silver price declined by nearly $1 on Tuesday as both gold and crude oil prices crashed after fears relating to hurricane Gustav eased. This could lead to further rise in demand for bullion.
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Silver importers enter just-in-time mode
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