The metal has also lost its flavour as an investment product and the trade says this bearish trend will not be over soon. Suresh Hundia, a Mumbai-based bullion dealer said: “There is no demand for silver in the market now. The industry can expect some demand only in August. There is a huge stock of silver with traders now. They will first have to offload this and then place fresh orders.”
Investors who bought the metal when it soared to 60,000 – 70,000 per kg are waiting to offload it if prices go up although analysts say there is no positive trigger in the near term. Two years ago, prices shot up to 75,000 per kg. Industrial demand for silver has remained muted due to a slowdown in the growth of the electronic industry, the major user of the metal.
Anjani Sinha, CEO and MD of National Spot Exchange, said: “There has been a drop in interest in silver among investors. Earlier, an average 400-500 kg of silver was bought everyday by investors through our e-silver platform. But now this volume has declined to 200 kg. And we do not see an immediate recovery in silver.”
South India, a major market for silver, has not seen growth even though prices have fallen. TM Srinivasalu, a Chennai-based leading silver merchant, said demand for silver has fallen when compared to gold. Silver in south India is largely used for deities and utensils.
“Nowadays people are not keen to keep silver deities in their homes due to safety concern, which is affecting silver demand. There are no major purchases because of speculation that prices will fall further. The volatility in the dollar-rupee exchange rate has to be corrected first to bring some demand in silver. Exports of silver items too have dwindled. We were exporting tableware to the US and Australia but demand from these countries has come down.”
India, one of the world’s largest consumers of silver, along with the US and China, imported about 1,900 tonne in 2012. Hundia said imports will come down this year because of the government’s restrictions.
Ujjwal Zaveri, partner, DP Zaveri & Sons, a 35-year-old silver firm in Mumbai’s Zaveri Bazaar, said: “There is no demand for silver at all in the market unlike gold. A price crash in gold has spurred demand among Indian consumers but in the case of silver it has not happened so. People are thinking that silver prices will further crash and are holding back their decisions.”
Source