High prices seen limiting India gold imports
Fri May 4, 2007 4:03 PM IST
By Biman Mukherji
NEW DELHI (Reuters) - Soaring gold prices are expected to cap imports of the yellow metal by India's state-run MMTC in the 2007/08 financial year at near the year-ago figure of 140 tonnes, its chairman said on Friday.
India has doubled imports to an annual 800 tonnes during the last four to five years, Sanjiv Batra, head of its largest gold importer, told Reuters.
It now buys nearly a third of global output of 2,500 tonnes.
"One-third of the world's production is a lot of consumption," Batra said.
"It (imports) has increased substantially in the last few years, and I don't see it increasing at the same pace in the near future, especially as the prices have gone up so steeply."
He expected imports to stabilise.
Batra said a recent strengthening of the rupee against the dollar could help to spur short-term buying, despite the upward spike in international gold prices.
Gold rose to a 26-year-high of $730 an ounce in May last year. Spot gold prices are ruling at about $680 an ounce.
The rupee hit a nine-year high of 40.60 against the dollar last week, bringing down the cost of imports.
"There is a bit of relief for buyers from the hardening of the rupee," Batra said, adding the stronger local currency fuelled sales during the Hindu festival of Akshaya Tritiya last month, when it is considered auspicious to buy gold.
Batra said gold prices were likely to hold between a range of $650 to $750 an ounce over the next year.
Gold consumption was changing with Indian buyers opting for light jewellery, rather than heavier, more ornate designs.
Batra said MMTC was looking to tie up with top jewellery retailers, and may set up a jewellery manufacture and design unit and another for making gold and silver medallions.
ORE EXPORTS
He added the export of iron ore was likely to remain "stable" this financial year, near last year's 93 million tonnes, despite a new duty on sales imposed in February and partially rolled back on Thursday.
"In spite of the cess being put, the demand continues to be very good," Batra said.
India brought down the export duty on low-grade iron ores below 62 percent iron content ore to 50 rupees from the earlier 300 rupees on Thursday, following protests by the domestic ore industry.
in.today.reuters.com |
