Silver market set to hit multi-decade deficit this year on strong demand – report

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(Kitco News) – Global silver demand is expected to reach record levels in 2022, according to the Silver Institute, driven by new highs in industrial demand, jewelry and silverware decline and physical investment.

These were some of the key findings reported by Philip Newman, Managing Director of Metals Focus, and Adam Webb, Director of Mine Supply, during the Silver Institute’s Interim Silver Market Review in New York today, which includes historical supply and demand statistics and – estimates for included 2022.

The report’s authors said that global silver demand is expected to hit a new high of 1.21 billion ounces in 2022, up 16% from 2021, adding that every key segment of demand, with the exception of photography , will record a new high.

According to the report, industrial demand for silver is expected to grow to 539 million ounces (Moz) in 2022, up 5% from 2021 (511 Moz).

“Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), increasing adoption of 5G technologies and government commitment to green infrastructure will see industrial demand overcome macroeconomic headwinds and weaker consumer electronics demand,” it was said.

In addition, physical investments are on track to increase 18% to 329 million ounces in 2022, which would also be a new record. In contrast, exchange-traded products are forecast to see the largest annual decline in inventories totaling 110 million ounces, due in part to silver’s higher volatility than gold, which has made it more vulnerable to profit-taking.

Demand for silver jewelry and silverware is also expected to rise 29% and 72% this year to 235 million ounces and 73 million ounces, respectively, mainly on the back of an unprecedented recovery in Indian demand. This is partly due to strong restocking ahead of the festival and wedding season following a heavy destocking in 2021.

This year, Metals Focus expects the average silver price to fall 16% year-on-year to $21.00. Metals Focus expects the US Federal Reserve to continue raising interest rates and increasing the opportunity cost of precious metals, which combined with rising yields and continued dollar strength will continue to put downward pressure on silver prices.

Regarding silver supply, mined silver production is expected to increase 1% yoy to 830 Moz in 2022. Production in Mexico will increase most significantly as several large new silver projects that have come online in recent years continue to ramp up to full production rates. Silver production from by-products from existing mines and new projects in Chile will also be an important contributor to growth. These increases are partially offset by lower production from major silver producers such as Peru, China and Russia.

Importantly, the global silver market is expected to post a second straight deficit this year. At 194 million ounces, this will be a multi-decade high and four times the level of 2021, analysts concluded.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.

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