India resumes silver imports as foreign
price falls below domestic price
Le Metropole Members,
7:31p ET Sunday, April 25, 2004
Here's a news story from India that suggests that
the Western silver price, determined largely by
the futures market in New York, has fallen below
the price for real silver in India, a major
consumer of the metal.
* * *
Business Line, India
Sunday, April 25, 2004
http://sify.com/finance/fullstory.php?id=13461577
After a break of about four months, silver imports into
the country are slated to resume, say reliable sources
in the bullion trade. This follows a small price
advantage to importers as the fall in domestic prices
has not been as sharp as the decline in international
prices.
According to these sources, some 10 containers
amounting to 200 tonnes were booked for import last
week. These consignments are expected to arrive in the
next 10 to 15 days at Kandla and Nhava Sheva (Mumbai)
ports. Majority of the importers are banks, the sources
added.
"Imports have resumed due to price advantage. Imports
are cheaper by about 200 rupees a kilogram over local
prices," Dinesh Parekh, former director of the Bombay
Bullion Association (BBA), said.
Imports in small lots have already begun this week via
air route through major banks and importing agencies.
During the last three to four days, the daily arrivals in
Mumbai are reported to be around 600 to 650 kg.
Besides, silver scrap inflows in to Mumbai market have
declined to just 150 kg from the record level of 750 kg
last week.
However, Suresh Hundia, president of the Bombay
Bullion Association feels otherwise. "There are no reports
of fresh deals for imports. A few stockists and banks have
some stocks-on-hand that are enough to cater local
demand," he told Business Line.
Silver prices in Mumbai have fallen by 2,380 rupees, or 20
percent, to 9,820 rupess per kilogram in just 23 days from
an all-time high of 12,270 rupees per kilogram quoted on
April 2. In the New York market, silver dropped by $2.40 to
$6.03 an ounce on Thursday from the recent new high of
$8.45 an ounce on April 2, in intra-trade, a fall of nearly
30 percent. The surging of dollar value against euros is
another reason for this trend.
The fall in the domestic market recent times has been
more pronounced with silver losing as much as 1,295
rupees in three days as the global markets continued to
melt down on hectic selling. On April 14 the white metal
recorded its first biggest fall of around 1,300 rupees per
kilogram on a single day. But despite the heavy fall, there
still exists a gap between domestic and overseas prices,
creating a profit opportunity for importers.
"Following sharp fall in local prices, demand will increase.
Local offtake of silver has picked up this week," Bhargav
Vaidya, a bullion analyst and director of BBA, said.
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