Silver market to hit multi-decade high deficit this year due to strong demand – report



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(Kitco News) – According to the Silver Institute, global demand for silver is expected to hit a record total in 2022, driven by new highs for industrial demand, jewelry and silverware purchases, and physical investment.

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

The report’s authors said global silver demand is expected to reach a new high of 1.21 billion ounces in 2022, up 16% from 2021, adding that each key demand segment, including exception of photography, should show a new peak.

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

“Developments such as ongoing vehicle electrification (despite weak vehicle sales), growing adoption of 5G technologies and government commitments to green infrastructure will enable industrial demand to ride out macro headwinds. -economics and declining demand for consumer electronics,” he said.

To add more, physical investment in 2022 is set to jump 18% to 329 Moz, which would also be a new high. Exchange-traded products, on the other hand, are expected to see the largest annual decline in holdings totaling 110 Moz, in part due 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 jump 29% and 72% to 235 Moz and 73 Moz respectively this year, driven mainly by an unprecedented rebound in Indian demand. This is partly due to a strong replenishment of inventory ahead of the holiday and wedding season, following a significant depletion of inventory in 2021.

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

In terms of silver supply, in 2022 mined silver production is expected to increase 1% year-on-year to 830 Moz. Mexico’s production will increase more significantly as several major new silver projects that have been commissioned in recent years continue to ramp up. Silver production as a by-product from existing mines and new projects in Chile will also be a major contributor to growth. These increases will be partially offset by lower production from major silver producers such as Peru, China and Russia.

Importantly, the global silver market is expected to record a second consecutive deficit this year. At 194 Moz, it will be a multi-decade high and four times the level seen in 2021, analysts concluded.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of 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 strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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