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Global Silver Demand Rising to a New High in 2022
Posted on 11 18, 2022
Silver Jewelry and Physical Investment both forecast to surge by 50 Moz to record highs this year
(November 17, 2022) – Silver demand is forecast to reach a record total in 2022, driven by new highs for industrial demand, jewelry and silverware offtake and physical investment. These were some of the key findings reported by Philip Newman, Managing Director at Metals Focus, and Adam Webb, Director of Mine Supply, during the Silver Institute’s Interim Silver Market Review in New York today, which featured historical supply and demand statistics and estimates for 2022. The following are the key highlights from the presentation:
- Global silver demand is expected to reach a new high of 1.21 billion ounces in 2022, up by 16% from 2021. Each key segment of demand, except photography, is set to post a new peak.
- Industrial demand is on course to grow to 539 million ounces (Moz). Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand.
- Physical investment in 2022 is on track to jump by 18% to 329 Moz, which would also be a new record. Support has come from investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government, and buying on price dips. The rise was boosted further by a (near-doubling) of Indian demand, a recovery from a slump last year, with investors often taking advantage of lower rupee prices.
- Exchange-traded products, in contrast, are forecast to see the largest annual decline in holdings totaling 110 Moz, due in part to silver’s higher volatility than gold, which has made it more vulnerable to profit-taking. Institutional investors are expected to retain a bearish stance as real yields are likely to strengthen, encouraging further distance from the white metal.
- This year, Metals Focus expects the average silver price to ease by 16% year-on-year, to $21.00. Through to November 7, prices have fallen by 14% year-on-year. Metals Focus expects the U.S. Fed to continue lifting interest rates, raising the opportunity cost for precious metals and this, combined with rising yields and ongoing dollar strength, will continue to exert pressure on silver prices. Additional stress will also come from silver’s industrial nature, as growing fears over a possible recession will weigh on sentiment, despite its extremely favorable fundamental backdrop.
- In 2022, mined silver production is expected to rise by 1% year-on-year to 830 Moz. Output from Mexico will rise most significantly as several major new silver projects that have come online in recent years continue to ramp-up to full production rates. By-product silver production from existing mines and new projects in Chile will also be a major contributor to growth. Partially offsetting these rises will be lower output from major silver producers such as Peru, China, and Russia. Rising inflation, particularly from higher oil and natural gas prices, has put significant upward pressure on costs for miners in 2022. However, in the first half of the year rising operating costs for silver miners were surpassed by higher by-product revenues. As a result, the average all-in sustaining cost (AISC) in H1.22 fell by 10% y/y to $9.72/oz. By-product metal prices have fallen in the second half of the year and therefore silver miners’ costs are expected to increase in H2.22.
- Silver jewelry and silverware are set to surge by 29% and 72% respectively to 235 Moz and 73 Moz this year, mainly thanks to an unprecedented rebound in Indian demand. This has partly been driven by strong inventory replenishment ahead of the festive and wedding season, following heavy stock depletion in 2021.
- The global silver market is forecast to record a second consecutive deficit this year. At 194 Moz, this will be a multi-decade high and four times the level seen in 2021.
Total Global Silver Demand Posts Record High of 1.24 Billion Ounces in 2022
Posted on 04 19, 2023
Silver Market in New Era of Structural Deficits
(New York City, N.Y. – April 19, 2023) All major silver demand categories achieved record highs in 2022, pushing total silver demand to a new high of 1.242 billion ounces (Boz) last year. Silver industrial demand rose by 5 percent, physical investment increased by 22 percent, and jewelry and silverware rose by 29 and 80 percent, respectively, leading to the total global silver demand milestone. Since 2020, the global total has increased by 38 percent as world economies recover from the pandemic.
Along with record silver demand and lower mine production, the silver market achieved its second consecutive annual structural deficit, at a significant 237.7 million ounces (Moz) last year.
These and other important drivers of the 2022 silver market are examined in World Silver Survey 2023, released today by the Silver Institute. The Survey also provides insights and an outlook for this year’s silver market. The Survey was researched and produced for the Silver Institute by Metals Focus, the London-based independent precious metals consultancy.
Silver Demand
Following a strong recovery in 2021, total silver demand took a major leap last year, with total offtake growing by 18 percent to 1.242 Boz. With the exceptions of slight drops in photographic and brazing alloys demand, all other fabrication sectors achieved new highs. Demand from the industrial segment posted another record in 2022, of 556.5 Moz. Some of these gains reflected green economy applications, particularly the significant growth in photovoltaics (P.V.), which consumed 140.3 Moz of silver in 2022.
Industrial demand was also supported by electrification within the automotive segment and other power generation and distribution investments. A rise in vehicle output, 5G network investments, and growth in the construction industry also assisted this segment. Similarly, other industrial demand fabrication rose, chiefly due to increased demand for ethylene oxide (E.O.) catalysts. The overall total was also helped by thrifting and substitution (outside of P.V.) remaining modest. Apart from a 6 percent decline in Europe, all regions saw growth. India led with a 24 percent jump, followed by East Asia at 7 percent and North America at 6 percent.
Silver jewelry fabrication soared 29 percent to a record level last year at 234.1 Moz. This was led by India, where pent-up demand, combined with heavy re-stocking by retailers and a move to higher purities, saw volumes double compared to 2021. Notable gains were also seen in Europe, where higher consumption helped even as exports from Italy fell. Exceeding jewelry in percentage terms, silverware demand in 2022 saw astounding growth of 80 percent to 73.5 Moz, a record high. As with jewelry, gains in silverware were almost entirely due to India, where demand more than doubled last year on the back of employment and incomes returning to pre-pandemic levels.
Silver Supply
Global mine production fell marginally last year to 822.4 Moz. This followed strong growth in the previous year when production rose by nearly 6 percent as mines recovered from the disruption caused by the pandemic. Last year’s decline resulted from lower by-product output from lead/zinc mines, particularly in China and Peru. Production from primary silver mines was almost flat year-on-year, rising by just 0.1 percent to 228.2 Moz. Peru suffered the most significant decline at -8.5 Moz due to mine suspensions, falling grades at several major mines, and disruption due to social unrest. Mexico’s production, however, grew by 3.1 Moz, Argentina’s by 3.0 Moz, and Russia’s by 2.2 Moz.
Recycling activity rose for a third year in a row, with the 3 percent lift taking the total to a 10-year high of 180.6 Moz. This was driven by the 7 percent rise in industrial scrap, which reflected an increase in the processing of spent E.O. catalysts. However, jewelry and silverware recycling had only marginal gains.
Silver Investment and Price
Net physical silver investment rose for a fifth consecutive year to a new high of 332.9 Moz. India emerged as the top performer last year, registering a staggering 188 percent increase with silver investment benefiting from lower prices and bargain hunting. There was modest growth in the U.S., where the market contended with prolonged product shortages and exceptionally high premiums. Australian physical investment rose by 15 percent, while European demand was flat last year as Germany, its largest market, grappled with an unexpected and sudden VAT change.
Silver Market Deficit
Record global silver demand and a lack of supply upside contributed to last year’s 237.7 Moz market deficit, the second consecutive annual deficit, possibly the most significant deficit on record. Of note, the combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years.
Outlook for 2023
This year is expected to be another of solid silver demand. Industrial fabrication should reach an all-time high, boosted by continued gains in the P.V. market and healthy offtake from other industrial segments. Although bar & coin demand and jewelry fabrication are expected to fall short of last year’s exceptional levels, both are forecast to remain historically high. Supply, by contrast, is expected to achieve only low single-digit gains. As a result, this year will also see another large deficit for silver, amounting to a projected 142.1 Moz, which would be the second-largest deficit in more than 20 years. Adding up the supply shortfalls of 2021-2023, global silver inventories by the end of this year will have fallen by 430.9 Moz from their end-2020 peak. To put this into perspective, it is equivalent to more than half of this year’s forecasted annual mine production, and more than half of the inventories presently held in London vaults offering custodian services.
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i find it interesting they predict a 2023 average silver price to be $21.30 with lows around $18 .......* bump *
Total Global Silver Demand Posts Record High of 1.24 Billion Ounces in 2022 |
www.silverinstitute.org
Direct link to the survey:
they are sponsered by the silver producers ...would think they would default to a higher predictionThey're in on the rigging, lying, and deceit.
i find it interesting they predict a 2023 average silver price to be $21.30 with lows around $18 .......
they are sponsered by the silver producers ...would think they would default to a higher prediction
im not sure i understand the motivation either way.......but i doubt it really affects the byproduct producers ......but the primary producers use predictions to taylor their mining plan...IE low prices and high fuel costs may drive them to mine the higher grade parts of their sites to remain profitable.....whereas byproduct producers mine to meet demand of their primary metal and silver is just a byproductShareholders might get noisy if they predict high prices (and presumably high profits) for the immediate future?
Industrial demand for silver will continue to grow, putting pressure on supply and prices and forcing substitutions by manufacturers, according to analysts at Metals Focus.
“Over the past decade, industrial silver consumption has grown steadily, raising its share of total demand to around 50%, chiefly through help from the vigorous development of electronic and electrical related applications,” the analysts wrote in the latest Precious Metals Weekly report. “In 2021-22, silver industrial fabrication hit successive record highs, with volumes in 2022 16% higher than the 2010 total.”
These highs were driven by the rapid growth of green energy applications such as photovoltaics (PV) and electric vehicles (EV). “This growth in turn helps explain why, in the foreseeable future, the silver market is likely to face a persistent structural deficit,” they write.
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