Silver imports have risen by as much 60 per cent on a year-on-year basis to reach 4,200 tonnes in October, and are likely to end the year with 5,000 tonnes, according to Thomson Reuters GFMS. Restocking after last year's fall and industrial demand have led to the rise and "with overall improved consumption sentiment and improving rural demand, we expect import demand next year to rise further by approximately 10 per cent," says Sudheesh Nambiath, regional lead analyst, GFMS. Imports fell significantly in 2016 to 2,794 tonnes, from an all-time high of 7,955 tonnes in 2015. Says Viraj Didwani, Director at Foresight Bullion India, a large silver importer and wholesaler: "After demonetisation, cheques deals are catching up; we see dealers/jewellers in even smaller towns shifting to banking channels to buy silver." As a result, unaccounted silver flows are largely from customers who sell jewellery or bars back to jewellers and insist on cash. The wholesale business has reportedly moved to cheques. Chirag Thakker of Ahmedabad-based Amrapali group, says: "Industrial demand is also better. However, investment demand is down, as people are more bullish on the equity market this year." Both Didwani and Thakker believe demand will be more price-sensitive in 2018. The Washington-based Silver Institute says in its 2017 interim report, "The price has averaged $17.16/oz so far this year.
For the year as a whole, the GFMS team at Thomson Reuters forecasts the price to average $17.13/oz, marginally lower than the 2016 annual average of $17.14/oz."It adds: "The market is expected to switch to a small annual physical surplus of 32.2 million oz in 2017, after posting annual physical shortfalls for four years. Total silver supply is forecast to remain broadly flat in 2017, standing at 1,008.4 million oz. Total physical demand is forecast to drop by five per cent in 2017, to a total of 976.1 mn oz, led by a sharp fall in retail investment, although an upturn in silverware demand and a modest recovery in jewellery and industrial fabrication should help to offset some of that." Globally, silver demand for investment is expected to fall to 130 tonnes, from 205 tonnes in 2016. "In India," says Nambiath, "net investment demand was dull through most of the year. However, it managed to increase significantly during the Diwali week in western and northern India, where some dealers have reported that sales were 30-40 per cent higher than last years' Diwali week. But, overall investment demand this year will increase over last year; 2016 physical bar demand was the lowest in four years."