Explained: Why silver imports are down by 96%?

The primary reason of this drop is attributed to the good quantity silver jewellery scraps and bars coming into the market, especially when demand for the metal is weak, primarily due to the economic slowdown amid the coronavirus pandemic.

Some 300 tonnes of scrap silver comes into the market every month. Last year silver scrap supply was almost nil, it is now enormous with Hindustan Zinc adding some 40-50 tonnes in the market per month.

According to reports, analysts suggest that who invested in silver bars in 2011 for Rs 72,000 per kilogram are now selling — mostly to raise cash for daily activities. The same trend is visible for people who own silver jewellery.

Moreover, analysts said that silver futures on the MCX hit a record high of Rs 77,949 in August as compared to 46,000 in January, which they see as the perfect time for people to exit.

This mass selling of the silver metal has further reduced the requirement to import, which is the lowest since 2012.

Since March, demand for silver is abysmal — be it industry-wise or jewellery-wise — if the prices further go down, demand may see a boost in the festive season.

As one of the largest consumers of silver, the weak demand and increased supply could weigh on global prices that have already risen to more than 50 percent in 2020.

The total predicted import of silver this year is 3,200-3,500 tonnes — 40 percent less than last year's.