NEW YORK (Scrap Register): Despite headwinds that confronted many asset classes in 2018, including most of the commodities complex, three significantly positive developments emerged in the silver market last year.
First, total silver demand increased for the first time since 2015, rising 4 percent to 1.03 billion ounces. Second, there was a robust recovery in retail investment, led principally by silver bar demand, which climbed sharply last year.
Third, on the supply side, global mine supply fell for the third consecutive year, following a continuous streak of 13 annual increases before 2016. Silver scrap supply has been in retreat since 2012 and fell by nearly 2 percent last year. These factors led to another tightening of the supply/demand balance, contributing to a physical deficit of 29.2 million ounces (Moz) in 2018.
These developments, and many others in the silver market, are discussed in World Silver Survey 2019, released today by the Silver Institute at events in New York City and Dubai, and tomorrow in Mexico City. The Survey is researched and produced by the GFMS Team at Refinitv (GFMS).
The 4 percent growth in total silver demand for 2018, reaching 1.03 billion ounces, marked a three-year high. The silver coin and bar category rose by an impressive 20 percent, although the rise was entirely driven by silver bar demand, which jumped up by 53 percent.
Silver bar demand was led by exceptionally strong sentiment in India, where demand leaped 115 percent higher last year. In contrast, coin and medal demand dipped by 4 percent, although the decrease was considerably lower than the losses recorded in 2017.
Silver jewelry demand moved 4 percent higher in 2018 to 212.5 Moz. India was again the standout, pushing its demand for jewelry up 16 percent to achieve a new record level. Demand also picked up strongly in North America, with the United States posting a 7 percent rise to an all-time high at 17.4 Moz.
Global demand for silverware jumped by 6 percent last year to 61.1 Moz, led by a strong recovery in demand from India, which experienced a 10 percent increase to 41.8 Moz. Turkish silverware demand rose by 20 percent to 1.6 Moz, a level not seen since 2009.
Global industrial silver demand contracted 1 percent to 578.6 Moz, primarily due to a dip in silver’s use in photovoltaics (PV), which was down 9 percent last year. The PV sector faced ongoing thrifting and substitution pressures last year.
Looking ahead, demand for silver from the PV sector is forecast to improve as governments from various countries continue their commitment to generating electricity from renewable energy sources, including solar. Australia, Europe and India are anticipated to see increased installations of solar energy systems in the coming years.
Electronics and electrical demand, the largest component of industrial silver demand, consumed 248.5 Moz last year, a 2 percent increase over 2017. China, the United States, Japan, Germany and India were the main demand centers in this category. Brazing alloys and solders consumed 58.0 Moz in 2018, a 1 percent increase over the previous year, led by demand in China, the United States, Japan, India and the United Kingdom.
Silver’s use in photography fell by 4 percent last year to 39.3 Moz, but demand appears to have stabilized with renewed interest in various photographic applications utilizing silver, especially instant photography systems, which are increasingly popular among the youth demographic.