Exceptional growth in key sectors leads to record high silver demand in 2015

The global silver market saw record demand in 2015, with the jewellery, coin and bar, and photovoltaic sectors posting new highs, helping to boost total silver demand to 1.17 billion ounces last year, the World Silver Survey said.

Overall silver supply to the market was lower, led by the continued weakness in silver scrap sales, it said, adding that last year’s supply and demand scenario led to the third successive annual silver market deficit, reaching 129.8 million ounces (Moz), more than 60 percent larger than 2014 and the third largest on record.

Silver Demand

Globally, silver jewelry fabrication increased for the third consecutive year to post a fresh high at 226.5 Moz, said the report by the Silver Institute.

This increase was largely achieved on the back of an impressive 16 percent rise from both India and Thailand, while North America posted a 5 percent annual increase. These gains were partially offset by a sizable contraction in Chinese jewelry offtake.  Total silverware fabrication enjoyed its third successive annual rise to an estimated 62.9 Moz, a 10-year high, the report said.

The largest component of physical silver demand, industrial applications, which accounted for 50 percent of total physical silver demand last year, was 4 percent lower, totaling 588.7 Moz. This drop was largely due to weaker fabrication demand in developing countries and a stagnant global economy.

On a regional basis, modest increases in industrial demand were posted in the United States and Japan, the second and third largest sources of industrial demand, respectively.  Electrical and electronics use declined by 10 percent last year to 246.7 Moz, due to slower economic growth in developing countries and the continued weakness in computer sales.

In the industrial segment.  Silver demand for photovoltaic applications rose 23 percent in 2015 to 77.6 Moz, marking the second consecutive year of increases in this sector, driven by strong growth in Chinese solar panel installations. Silver demand for ethylene oxide (EO) grew an impressive 103 percent to 10.2 Moz.

Silver’s use in brazing alloys and solders fell by 5.0 Moz and photography demand slid by 4 percent last year. The pace of decline in photography slowed considerably, to its lowest rate since 2004, as digital technology in the photography industry approaches maturity.

Silver Investment & Price

Identifiable investment, which includes physical bar investment, coins and medals, and exchange traded product (ETP) build, climbed 16 percent to a near record high in 2015.  Silver coin and bar investment surged 24 percent to reach 292.3 Moz, the highest annual demand level, overtaking the previous high in 2013.  Coin and bar demand accounted for 25 percent of total physical demand in 2015, the highest market share on record and up from just 5 percent a decade earlier. Silver coin and medal demand amounted to 134.1 Moz of demand last year due to unprecedented growth in several key markets, notably the United States and India, the report said.

It said holdings in silver-backed ETPs declined by 17.7 Moz in 2015, finishing the year at 617.8 Moz.  However, demand in this investment category has rebounded with ETPs reaching 640.0 Moz at the end of the first quarter 2016.

Silver Supply 

According to the report, global silver mine production growth slowed to 2 percent in 2015 and reached a record 886.7 Moz.   The mine production growth was attributable to stronger output in Peru, Argentina, Russia and India, while Canada, Australia and China had lower mine production, with the latter decreasing output by 3 percent.

Primary silver mine production grew 5 percent, and accounted for 30 percent of global silver mine supply.  The overall slowdown in mine production last year is expected to continue, the report said.

Scrap supply was significantly down by 13 percent at 146.1 Moz, the lowest volume level recorded since 1992 and the fourth consecutive year of decline.  Behind the decline were fewer collectors active in the market and some holding back material awaiting higher prices.  Government sales of silver were again essentially nonexistent, the report said.

 

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