DEMAND HIT Exports have fallen by 93% in the first quarter of the current fiscal, exporters now eye emerging markets
India’s silver jewellery is fast losing its charm in the global markets as exports have fallen sharply by 93.04% in the first quarter of current fiscal, compared with Q1 of FY18, with buyers from the Middle East, the US and other nations staying away. Analysts said the price of silver has been range bound in the first six months, which has affected its demand in the overseas markets. There is no immediate trigger for prices to rise, but analysts have indicated that silver prices will appreciate in the long run as the metal is fundamentally strong. Exporters are now eyeing emerging markets such as the CIS countries to market silver jewellery. Talking to ET, Pramod Agarwal, chairman, Gem & Jewellery Export Promotion Council (GJEPC), said that 5% VAT imposed by the UAE has brought down silver jewellery exports to the region.
“We are now beefing up this vertical so that exports of silver jewellery increase. We have seen that there has been a major decline in exports of silver jewellery from Hyderabad and Surat special economic zones, and are trying to find out the reason for the drop in exports through these two SEZs.” Export of silver jewellery for the April-June 2018 period is pegged at USD 119.9 million, a decline of 93.04% in comparison to USD 1,722.16 million in the corresponding period of the previous fiscal.
Prices of silver, which were Rs.38,925 per kg on January 1, 2018, have slipped to Rs.37,780 per kg on Wednesday. “Silver is undervalued now, but the downside is limited. Prices may not fall below the Rs.37,000-mark immediately. Nearly 50% of the silver is used for industrial purpose unlike gold which is only used for jewellery and investment purposes. It is expected that price of silver will claw back and is expected to hover between Rs.42,000 and Rs.45,000 per kg,” said Gnanasekar Thiagarajan, director, Commtrendz Risk Management Services. In the domestic market too, demand for silver isn’t picking up. Haresh Acharya, secretary of Bullion Federation, said the country generally imports around 7,000-7,500 tonnes of silver.
“Every quarter, import of silver is around 1,750-1,800 tonnes. But in April-June of FY19, import is less by 35%-40%. The demand for both gold and silver continues to remain muted. There is uncertainty in the market now. If monsoon pans out well, then rural demand will pick up. Market will witness price as well as demand recovery for precious metals if rural demand picks up during Dussehra-Diwali period.”
The Economic Times, 09th August 2018
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