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Despite the festive season, gold import declined by a huge 90% in August 2009, as the high prices deterred people from buying the precious metal, especially after drought triggered fears of a dent in rural income. The import of gold this festival season (September-December) is expected to be much lower than last year’s level of 146 tonnes, if prices remain firm at around Rs15,000 per 10gm. The country’s gold import between January-August 2009 is estimated to have come down to about 69.4 tonnes from 261 tonnes in the year-ago period. In January 2009, imports had fallen to just 1.8 tonnes, followed by nil imports in February and March.
Silver coin prices hit an all-time high of Rs30,600 for 100 coins on increased demand due to the festival season. Prices shot up by Rs200 to Rs30,500 for buying and Rs30,600 for selling 100 pieces. Silver prices surged by Rs450 to Rs24,300/kg on brisk buying by coin-makers and stockists to meet the demand for the coming festivals and marriage season.
India’s edible oil import is expected to dip 25% in the next season, as imports this season would more than offset any domestic deficit caused by drought. India’s edible oil import has already gone up by about 66% to nearly 6.1 million tonnes so far this season.
Aluminium prices saw a revival during June-August 2009 due to supply concerns of Japanese primary aluminium buyers in the March 2009 quarter. Also, following an accident at Russia’s largest hydroelectric power station in Siberia, RUSAL, the world’s largest aluminium producer, has announced production cuts of about 500,000 tonnes. Between mid-May and 2 September 2009, aluminium prices surged by almost 33% on the London Metal Exchange (LME). However, the record LME inventories of 4.4 million tonnes remain a drag on the metal prices. Moreover, China’s aluminium imports in July 2009 were down almost 51%.
In the domestic market, raw jute prices crashed 40% to reach around Rs18,000 a tonne in August 2009 from the all-time high of Rs30,200 a tonne in July 2009, on concerns of a possible 25% dilution in Jute Packaging Materials Act (JPMA) of 1987. Sugar industry made it worse for the raw jute price, as they refrained from procuring jute bags despite the arrival of the new jute crop from 1 July 2009.
Natural rubber price is likely to rise further from its current level of Rs102 per kg for RSS-4 grade, on declining domestic production and robust demand from China. During April-July, production has dropped to 209,825 tonnes from 242,115 tonnes in the same period last year.
The government has decided to reduce the minimum export price for basmati rice to $800 per tonne from $1,100 per tonne. This is likely to help exports of this premium variety of rice at a lower price. This would increase the availability of other common varieties of rice in the domestic market allaying concerns of supply shortage due to poor paddy cultivation.