India's appetite for silver grew in 2014 despite global demand slowdown

Increased demand from jewellery makers and a sharp fall in prices saw India's silver imports rise 18% to 220 million ounce (6,843 tonne) in 2014. 

India was the second largest importer of silver after China. China’s imports increased 3% to 247 moz (7683 tonnes) but Chinese imports largely focussed on re-exporting after refining the metal.

In 2014, China was the largest supplier of silver to India, at almost 2000 tonne.

India’s demand for jewellery surged by 47% to 62.2 million ounce, according to a survey carried out by GFMS Thomson Reuters for the Silver Institute.

In 2014, the global demand for silver was 1,066.7 million ounz (moz) or 33,179 tonne, which was 4% lower than that of the previous year. However, had India’s imports (220 moz) not increased by 18%, the fall would have been much sharper. 

The fall in global demand was largely due to a fall in investment demand from 243.6 moz to 196 moz in 2014, a decline of almost 20%. 

As per the report, silver is less attractive from a returns perspective because of the impeding Federal Reserve action. A likely increase in interest rates in the US would be disadvantageous for the metal 

Reuters added that silver prices on average will decline 14% this year on speculation that the Federal Reserve will raise US interest rates, which will spur a shift to alternative assets.

Silver will drop to $16.50 an ounce from the average fixing price of $19.08 in 2014, Andrew Leyland, manager of precious- metal demand at Thomson Reuters GFMS, said in a telephone interview.

Meanwhile, fabricators restocked due to the fall in silver prices. More than half, almost 56% of the total global demand, came from the industrial sector, while 40% was from jewellers and investors.

Of the total supply (1061.8 moz), 83% came from mines while 16% came from scrap.