Silver heads for biggest deficit in decades, Silver Institute says
LONDON — Global demand for silver is
expected to rise 16% this year to 1.21 billion ounces, creating
the biggest deficit in decades, according to the Silver
Institute on Thursday night.
Use of silver by industry, for jewelry and silverware and
for bars and coins for retail investors were all forecast to
reach record levels, the institute said.
Automakers are using more silver as the amount of
electronics in vehicles increases, but the sector accounts for
only around 5% of total demand. Solar panels account for around
10% of silver demand.
Demand in India almost doubled in 2022 as buyers took
advantage of low prices to replenish stockpiles drawn down in
2020 and 2021.
Exchange traded funds (ETFs) storing silver for
investors shrank, however, returning metal to the market, but
the Silver Institute does not count ETFs as physical demand
because they only store wholesale silver bars and do not rework
The Silver Institute predicted a deficit of 194 million
ounces this year, up from 48 million ounces in 2021.
Demand is likely to fall next year, said Philip Newman at
consultants Metals Focus, which prepared the Silver Institute’s
“India’s restocking is likely to trip over into 2023 but at
some point will dissipate,” he said. “By extension, you could
see some decent figures in 2023 but it may not match 2022.”
Newman said he expected strong demand from industries such
as solar panel and auto makers and more silver supply deficits
in the coming years, but not as large as in 2022.
The amount of silver stored in vaults in London and New York
monitored by the COMEX exchange and the London Bullion Market
Association has fallen by around 370 million ounces – or 25% —
But Newman said there was plenty of silver left. “You do
have still sizeable stocks,” he said. “I don’t think that’s a
Silver prices have fallen around 10% this year to $21
an ounce, mostly due to financial investors selling silver in
response to rising U.S. bond yields and a strengthening dollar.
Following are numbers for 2022 and comparisons.
SILVER DEMAND (MILLIONS OF OUNCES)
2021 2022F % change
Mine Production 821 830 1%
Recycling 176 185 5%
Net Official Sector sales 2 2 0%
TOTAL SUPPLY 998 1,017 2%
Industrial 511 539 5%
Photography 29 28 -3%
Jewellery 182 235 29%
Silverware 43 73 70%
Net Physical investment 278 329 18%
Net Hedging Demand 4 5 25%
TOTAL DEMAND 1,046 1,210 16%
MARKET BALANCE -48 -194 304%
Exchange traded products 65 -110
BALANCE LESS ETPs -113 -84 -26%
Average price $/oz 25.14 21 -16%
*Source: The Silver Institute, Metals Focus
(Reporting by Peter Hobson; Editing by Lisa Shumaker)
Comments are closed.