Industrial demand to drive robust growth of Silver
Silver’s use in industrial applications, accounting for approximately 60% of total silver demand in 2018, is forecast to see a modest decline this year of 1.8% reaching 585.4 Moz, according to the GFMS / Silver Institute Interim Silver Market Review, which includes provisional supply and demand forecasts for 2018. The interim review was released in November at the Institute’s Annual Silver Industry Dinner in New York City.
Demand for electronic and electrical applications is forecast to continue to drive robust growth, forecast to expand by 2.8% to 249.6 Moz in 2018. A general rise in electrical equipment has spurred the need for silver-coated circuity, wires and switches from a variety of end uses. Following the increased electrification of powertrains, the automotive sector is taking a lead in this development.
Global total physical demand is expected to contract by 3.0% to 963.0 Moz, with bar and coin demand being the main driver behind the fall, in 2018. New physical coin demand has remained under pressure this year, particularly in the United States during the first half of the year, as investors relied on the secondary market with older-dated coins for their investment needs.
The silver market is expected to post a physical surplus of 35.3 million ounces for 2018, which is higher than the previous year. The report also noted:
1: Net holdings of exchange traded products have contracted 0.5 million ounces as of November 15 following seven annual increases in the last decade. On the other hand, exchange inventories have increased for the third consecutive year in 2018, particularly on COMEX, which represents approximately 76% of total, rising by 52.5 million ounces.
2: Following a drop of 1.5% in 2017, total silver supply for 2018 is forecast to marginally rise by 0.3% to 998.4 million ounces. The increase is solely driven by mine supply returning to growth this year, rising 1.6%, following declines in output recorded in the prior two years. At 5.4 million ounces, North America is forecast to shed the largest portion of supply which is offset by gains recorded in Oceania, Asia and Africa.
