If restrictions on imports continue, there may be a shortage of silver in the country during the upcoming festivals and wedding season. The demand for silver is expected to increase in the future. This estimate has been made by Harshal Barot, Senior Consultant (South Asia and Middle East), Metals Focus.
**License required for most silver**
Currently, importing silver under most HS codes requires a license from the Directorate General of Foreign Trade (DGFT). This has made it difficult to get new supply of silver. As a result, the domestic market has become more dependent on existing stocks and recycled silver. Selling pressure has also increased in exchange-traded funds (ETFs), leading to a decline of about 10 percent in premiums.
**Make do with existing silver stocks**
“The market is undersupplied. There is no new metal available, so the market is making do with existing stocks. Some recycled silver is coming into the market, but new imports are very low,” Barot said. Its impact is less now due to lack of demand, but the situation may change from August, as purchases usually increase before festivals and wedding seasons.
**Expectation of increase in demand for silver after August-September**
“We expect demand to increase after August-September as the festival and wedding season usually starts in India only then,” he said. He said if imports do not resume by then, an extraordinary situation could arise in the market – with high demand and low supply. He said that traders are looking for alternative routes of import, which also includes door sourcing of silver. If imports resume, domestic premiums may come down.
**Silver may reach $100 per ounce next year**
Although domestic demand for silver is weak right now, industrial demand remains strong despite rising prices. Barot said that investors remain positive about silver. Despite some selling in ETFs, there has been no major selling in silver. Metals Focus believes silver prices will rise next year. Prices could reach $80-$85 per ounce in the next 12 months. He said that if demand remains as strong as last year, silver could reach $100 an ounce.