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After rising 71% in Dec, five reasons why gold imports will halve in Jan

After rising by a staggering 71% in Dec 2017, the decline in imports this month has its roots in both tradition and economics

Rajesh Bhayani  |  Mumbai 

Gold

After a sharp rise in imports in the December, inward shipments of the precious metal are expected to halve in January. According to data from the ministry of commerce released on Monday (yesterday), imports in December 2017 were up 71 per cent to $3.39 billion. In tonnage terms this is 81 tonnes from 30 tonnes in December 2016.

However, a source tracking imports say, “In January, the import figure is expected to fall sharply and may halve from December.” Based on his analysis and talks with market players, there could be five reasons why January imports could be lower.

1. The first half of January (ahead of 14 January or Makar Sankranti) is considered as inauspicious for buying, hence the demand has been low.

2. price are also on the rise and Indian demand, according to the source, has been price sensitive. During the past one month international prices have risen 6.5 per cent and the metal is quoting at $1,337 an ounce. In Mumbai, the price is up 5.4 per cent and at its highest since September 2017, at Rs 30,095 per 10 grams.

3. The price rise that began mid-December prompted the market to curb imports in order to rein in further price increases, and to ensure a favourable revision in tariff value in January. The government announces revision in the tariff value for calculating import duty every fortnight. This benchmark was hiked in January due to higher price in the second half of December.

4. Importers have calculated this in advance and hence advanced January imports.In January 2017, around 48 tonnes of were imported, but market players believe this month (January 2018) imports could be much lower at around 40 tonnes. This explain reports that the Union Commerce Ministry has proposed reducing import duty to a level that makes smuggling unremunerative. Smuggling has not fallen even after a year of and two quarters of implementation of

5. Due to expectations of a duty cut on February 1 when Union budget is to be presented, “traders and importers are cautious about importing gold,” the source says.

After rising 71% in Dec, five reasons why gold imports will halve in Jan

First Published: Wed, January 17 2018. 01:55 IST
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