MMTC PAMP has ceased refining of gold because of poor market conditions, sources close to the matter told FastMarkets.
The refiner, a joint venture between MMTC and PAMP of Switzerland, has not refined any gold doré since February and had been redirecting material back to Switzerland because of a moribund domestic market, those sources said.
MMTC PAMP, India’s only recognised LBMA Good Delivery refiner, will review its position as and when the market improves, FastMarkets understands.
The company is now understood to be looking to offload the inventory that it has built up, particularly during the 42-day strike that plagued the market following the government’s announcement of a one-percent excise duty on all gold jewellery sales in the budget at the end of February.
The Indian market, one of the largest in the world, has been dogged by several issues since the start of the year including high inventories, a change to the import duty on doré, the subsequent jewellers’ strike and a distinct lack of interest from key areas of the market.
“It is absolutely reflecting the current climate, which is not at all conducive for smelting at this moment… it’s in bad shape and this is what is happening,” an analyst in India said.
FastMarkets last assessed discounts in India at between $7 and $9 per ounce – a loss-making level for many of the country’s refiners, including MMTC PAMP, but a level that many of India’s smugglers are only too happy to sell at, sources said.
Many of the country’s market participants will now be looking to the annual monsoon season when good rains could return some positivity to the sector.
Since India’s 120 million farmers account for around 60 percent of domestic consumption, any impact on agricultural output can have a sustained effect on gold demand.
(Editing by Mark Shaw)