Silver imports hit as demand slumps

MUMBAI: Silver may survive a demand slump soon with the harvesting season approaching and the increase demand during the wedding season.

Demand for imported silver has been weak for some months following the rise in prices.

Silver prices are up nearly 10 per cent in 2008, with near month Futures on the Multi Commodities Exchange (MCX) having seen a 21-month high on February 1 at 21,980 rupees per kg.

During the past few months there has been no import of silver.

If the silver prices come down to Rs 17,000-19,000 per kg, the demand may increase.

Silver prices have risen, tracking gold, as fears of a slowdown in the US economy, credit market problems and a weakening US dollar led investors to flock to the metals as a safe bet.

The traditional silver to gold price ratio of 1:16 had widened as gold has risen faster.

Also rising gold prices could draw investors into silver, specially if gold rises to $1,000 ounce, making the yellow metal unaffordable.

Rising demand for industrial use of silver could also help push silver to Rs 23,000 on the MCX by the month-end and a Further rise to Rs 28,000-30,000 rupees at the year-end.

The March contract on the MCX traded at Rs 21,416, up Rs 156 from the previous day.