August 6, 2018 / 5:50 AM / 2 months ago

Rising gold dore imports to India to dent bank's market share

* Dore’s share in total imports to hit 40 pct from 5.6 pct in 2014

* Lower tax on dore gives refiners edge over gold supplying banks

* Total gold imports seen down 18.3 pct in 2018 to 750 T

By Rajendra Jadhav

KOCHI, India, Aug 6 (Reuters) - India’s gold dore imports may rise to a record in 2018 on lower import duties, leading the country’s bullion refiners to eat away at the share of the gold market held by banks.

Imports of dore, a semi-pure alloy made by miners, may climb to 300 tonnes this year from 250.6 tonnes, James Jose, the secretary of the Association of Gold Refineries and Mints, said on Saturday on the sidelines of the India International Gold Convention in the southern Indian city of Kochi.

India’s total imports of gold are likely to fall to 750 tonnes in 2018 which would raise dore’s share of imports to 40 percent, Jose told Reuters. India, the world’s second biggest gold consumer, imported 917.7 tonnes in 2017, according to the World Gold Council.

The rising dore imports should reduced the market share of refined gold-supplying banks such as JPMorgan, ICBC Standard, Scotiabank, UBS, HSBC.

“Dore’s share is growing due to duty advantage. Bullion players should continue to lose market share,” Marcus Garvey, commodities strategist at ICBC Standard Bank, said on Saturday.

The import tax on gold dore is 0.65 percent lower than on refined gold to promote bullion refining in India.

The duty difference lets Indian refiners offer gold at a slightly lower cost or at the same landed cost of gold that is charged the 10 percent import tax, said the Association of Refineries’ Jose.

“Bullion importing banks are finding it difficult to compete with refiners as their cost is higher. One dollar makes or breaks the deal,” said Jose.

Dore made up just 5.6 percent of India’s gold imports in 2014 but that share has increased in the past three years because of the lower duty.

India imports gold dore mainly from Ghana and Peru, while refined gold lands from Switzerland and the United Arab Emirates.

Overall, India’s gold imports in the first half of 2018 plunged 38 percent from a year ago to 311.4 tonnes as the depreciating rupee made local purchases expensive, said Somasundaram PR, managing director of World Gold Council’s Indian operations.

Demand in the second half of the year may improve because of purchases for religious festivals and as the fall in global prices near their lowest level in 17 months will lure buyers, said Shekhar Bhandari, executive vice-president of Kotak Mahindra Bank. (Reporting by Rajendra Jadhav; Editing by Christian Schmollinger)

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