Powered By Solar Demand, The Silver Institute Makes Case For Faster Silver Price Growth

US based The Silver Institute, in its annual report on the Silver market, has made the case for a faster rise in Silver prices, arguing that not only is the metal a high beta version of gold, but market conditions are also converging to drive up prices further. Chief among these is demand from solar panel makers, who have already wiped out the discount to London Metal Exchange rates for silver in China, where the metal is actually being sold at a premium to London prices now, claims the report researched by London based Metals Focus

For the third in a row now, silver demand exceeded supply comfortably in 2023. While the global market deficit fell by 30% y/y from last year’s likely all-time-high, at 184.3Moz (5,732t) it was still one of the largest figures on record. Crucially, last year’s deficit coincided with a year that saw sharp declines in bar and coin investment, jewelry and silverware demand that meant global silver offtake fell overall year-on-year.

2023 saw demand reach a new all time record, fueled by the sharp rise in solar demand and in spite of stagnation in some other sectors. Sluggish silver supply, owing to the slight decline in global mine production, was another factor contributing to silver’s deficit conditions last year.

The institute counting on these conditions to persist in making a 2024 projection for the gap between supply and demand grow by 17%. In its view, the key challenge silver has been facing are still high above ground inventories, which have prevented a faster price rise.

Recycling Growth

If only by a marginal 1%, 2023 saw recycling grow for a fourth consecutive year to a 10-year high of 178.6Moz (5,556t). Much like 2022, the industrial sector was the primary driver of volumes, which in turn was due to growth in the recycling of ethylene oxide (EO) catalysts. Jewelry scrap also rose, mainly due to record high silver prices in India. With higher prices, recycling rates can be expected to increase further of course.

Resilient Demand Led by Solar PV

While 2023 saw demand from solar PV industry rise to 193.5 Moz (6,017 tons), an annual increase of almost 64%, going ahead, the report projects a consistent 20% increase from the segment. China, with close to 90% share of global PV production, obviously led the way as demand rose by 44% annually to 261.2 Moz in 2023, led by solar PV. 

Offtake from the industrial sector achieved a record high last year, rising 11% to 654.4Moz (20,353t). Higher than expected PV capacity additions, combined with a faster adoption of new generation cells, raised electronics & electrical demand by a significant 20%. While other green-related applications, including power grid construction and automotive electrification also contributed, some fields, such as consumer electronics, were weighed down by macroeconomic challenges and elevated inventories. The overall total was also helped by limited thrifting and substitution as silver remains irreplaceable in many end-uses.

View the full report at World-Silver-Survey-2024.pdf (silverinstitute.org)