Silver Faces Supply Crunch as Rs 30k Premium Pushes Prices to Rs 1,85,000 Per KG
There is demand for silver even in the current price levels But the metal is facing a significant crunch in the market
Chennai: While the prices are making new highs on a regular basis, silver is witnessing a supply crunch – both in the international and Indian market. This has led to silver premiums in the Indian bullion market going up by 5-15 per cent. In the Delhi spot market, silver was sold at a premium of Rs 30,000 per kg on Tuesday.
“There is demand for silver even in the current price levels. But the metal is facing a significant crunch in the market. In the spot market, silver prices stood at Rs 1,85,000 per kg as the premiums were up by Rs 30,000. Premiums usually range between Rs 100 and Rs 400 per kg,” said Surender Jain of Delhi Bullion Association. At MCX, silver was priced at Rs 1,58,746 per kg.
The London bullion market started witnessing a shortage in silver after the metal was shipped in huge quantities to New York early this year due to worries that the metal supply could be hit by US tariffs, said Chirag Sheth, founder, Metals Focus. This has been jacking up prices, which went past $53 per ounce in the international market on Tuesday.
In terms of supply, India too is facing a crunch amidst strong demand even at higher price levels. In India, investment demand from the high net-worth individuals as well as institutions have been moving up in the past few months. Imports have been higher since May. However, in October the supply has been hit.
“Usually, the Free Trade Warehousing Zones store the duty-free silver and make the metal available as soon as the demand emerges in the domestic market. However, most of the FTWZ vaults are now empty. It takes more than a month for the silver to be imported from abroad,” said Sheth.
While the September imports would largely remain range-bound, October data may see a dip in silver imports. This supply issue has been increasing the premiums on silver.
However, most of the retailers have stocked silver for the festive season and shortage may not affect sales during Dhanteras and Diwali, said Sheth.
Meanwhile, gold touched a new high of Rs 1,30,800 per 10 gm in the Delhi market as the metal hit $4100 per ounce in the international market.
