Silver Demand Up

There was record demand for silver in 2015, thanks to strong growth in the photovoltaic industry along with coins and bars. The total demand for silver went up to 1.17 billion ounces, while the overall silver supply came down.

According to the World Silver Survey 2016 by the Silver Institute, which was researched and compiled by the GFMS team at Thomson Reuters, the total silver demand for photovoltaic applications went up 23% in 2015 to 77.6 million ounces (Moz). The coins and bars segment now takes the biggest silver share, it even grew slightly stronger than solar year-on-year at 24%. Demand from ethylene oxide (EO) grew by an impressive 103% to 10.2 Moz, but at much lower absolute numbers.

Total physical silver demand down
The largest component of physical silver demand – 588.7 Moz or 50% of the total demand in 2015 – came from industrial applications. But only solar and EO grew in this group. Electrical and electronics use of silver declined by 10% YoY to 246.7 Moz, attributed to slower economic growth in developing nations and continued weakness in computer sales. All the other industrial applications, including brazing alloys and solders as well a photography needed less silver in 2015 than the year before. All in all, demand from industrial applications decreased by 4% in 2015, owing to weaker fabrication demand in developing countries and a stagnant global economy, stated the report. In consequence,

Silver supply down
There was strong mine production growth in Peru, Argentina, Russia and India as Canada, Australia and China reduced the same. Yet, the global silver mine production growth slowed to 2% or 886.7 Moz in 2015. The report expects slowdown in the overall mine production to continue. Including scrap (146.1 Moz) – which was down by 13% YoY and the lowest volume level recorded since 1992 and the fourth consecutive year of decline – and hedging supply (7.8 Moz), which also decreased year-on-year, total supply dropped to 1,040.6 Moz in 2015, from 1,052.3 Moz in 2014.

With holdings in silver-backed ETPs declining by 17.7 Moz in 2015, finishing 2015 at 617.8 Moz, the total physical silver deficit grew to minus 112.5 Moz from minus 71.3 Moz in 2014.

Silver price dropped 18%

Yet the annual silver price came down nearly 18% from $19.08 per oz in 2014. The Silver report comments, "An extremely challenging year for nearly all commodities, along with a continued slowdown in Chinese economic growth and a stronger U.S. dollar, led to a lower average annual silver price of $15.68/oz in 2015. However, this lower price environment helped to boost physical demand, particularly as long term investors viewed lower prices as key entry points in expectation of future price appreciation."