The import of silver in Gujarat has experienced a staggering decline of 98 per cent during the months of April and May, primarily due to surging prices and weakened demand.
Data from the Ahmedabad Air Cargo Complex (AACC) reveals that silver imports have dropped from 97.6 metric tonnes (MT) during the same period last year to a mere 1.61 MT this year. The current price of silver in Ahmedabad stands at Rs 73,500 per kilogram.
Experts attribute this significant decline to a halt in industrial procurement, driven by the exorbitant prices and a decrease in investor demand. Silver prices have witnessed a remarkable surge, rising by 26.2 per cent from Rs 61,000 per kilogram in May last year to a peak of Rs 77,000 per kilogram in May this year, according to the India Bullion and Jewellers’ Association.
Haresh Acharya, advisor of the precious metals advisory committee at GIFT City, highlighted the impact of prolonged high silver prices on its demand. He stated, “Silver prices have remained above the Rs 70,000-mark for a month. The persistent high prices of silver have become a major deterrent to its demand. Industrial procurements, which account for nearly 50% of the silver consumption, have drastically decreased, while demand from retail and investment sectors remains low.”
Acharya further explained, “Furthermore, unseasonal rainfall has adversely affected crop yields in Gujarat, leading to weak demand in rural areas. Additionally, the delayed monsoon has further dampened the demand for silver. Investors are adopting a cautious approach and waiting for prices to stabilise before making new investments.”
The surge in prices has notably impacted retail demand in Gujarat. An Ahmedabad-based jeweller stated, “The demand for silver jewellery, artefacts, and gift articles, which had remained high for some time, has significantly declined now.” It is worth mentioning that silver imports had reached a record high of 1,173 MT in the fiscal year 2022-2023.
The decline in silver imports in Gujarat reflects the challenges posed by soaring prices and weakened demand. As the industry navigates through these circumstances, stakeholders are closely monitoring price fluctuations and awaiting a more favourable market environment to stimulate demand and revitalise the import sector.