Indian Silver Imports Lower in 2016, But Still Substantial.
Indian silver demand has fallen nearly 40% in 2016 from 2015, but is on pace to consume about 20% of the annual silver mining supply or the equivalent of the entire silver mining output of Mexico, the world’s largest silver mining country. Last year, India imported nearly 275 million ounces of silver or approximately one third of global silver mining production. India is on pace to import about 165 million ounce of silver in 2016 or approximately 20% of global silver mining production.
Demand for silver in India in 2016 has slowed from last year’s torrid pace, but as of April, India had imported nearly 1,600 tons (approximately 51+ million ounces). At the current pace, India will import approximately 5,000 tons (approximately 160 million ounces) of silver this year or about 20% of annual silver mining production.
Indian Silver Imports vs. U.S. Mint Sales
To put India’s silver demand in context, India imported 1,593 tons or approximately 51 million ounces of silver from January 2016 – April 2016 which is more than the amount of silver used by the U.S. Mint in 2015 to produce a record 47,000,000 one ounce American Silver Eagle coins.
Indian silver imports averaged over 600 tons per month from April 2015 – April 2016.
India has virtually no operating gold mines and a small silver mining industry. As such, silver demand has to be met from imports. India’s surge in demand has not been offset by any decrease in demand elsewhere in the world. Demand for silver for investment and industrial purposes is increasing, especially in the silver coin and bar sector which, according to the Silver Institute was up nearly four-fold from 2005-2015. In the first half of 2016, the United States Mint sold a record 26.3 million ounces of silver in the form of American Silver Eagle and America the Beautiful coins. The Canadian Mint also sold record amounts of silver in the first quarter and the Perth Mint has sold a record amount of silver through July.
Indian Silver Imports 2008 – April 2016
While Indian silver demand, met largely through imports, has slowed in 2016, its still represents approximately 20% of global silver mining production.
India’s silver demand has increased exponentially over the past ten years. India, however, has historically been known as a nation with a penchant for gold. Indeed, India has gold giving holidays as the yellow metal is revered for its beauty and as a store of generational wealth. Yet, 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.
In addition to possessing silverware, many Indians often adorn their homes with silver objects, like this rosewater sprayer and perfume holder.
Solar, Jewelry, Adornment and Investment Demand For Silver In India
Indians use silver to adorn their homes and temples (see above picture of a portion of the solid silver doors of the Karni Mata Temple) 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. Indians also purchase tens of millions of ounces in the form of jewelry, silverware and silver coins and bars.
Rising Silver Demand in a Country with Rising Population and Incomes
Global silver mining production is expected to decline about 9% in 2016, while Indian and world-wide silver demand is expected to remain robust.
Rising silver demand among India’s increasing population with rising incomes may strain silver supply.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.