Silver’s Use in Solar Sector Surged 34 Percent, Posts New Record
(New York City – May 11, 2017) Global silver mine production in 2016 recorded its first decline since 2002, largely the result of lower by-product output from the lead/zinc and gold sectors. Coupled with less silver scrap supply to the market, which posted its lowest level since 1996, as well as a contraction in producer hedging, total silver supply decreased by 32.6 million ounces (Moz) in 2016. Moreover, new highs were recorded for silver’s use in the photovoltaic and ethylene oxide sectors, both growing and significant industrial applications for silver. These findings, and other key components of the silver market, are discussed in World Silver Survey 2017, released today by the Silver Institute and produced on its behalf by the GFMS Team at Thomson Reuters (GFMS).
Silver Supply
Global silver mine production declined by 0.6 percent in 2016 to a total of 885.8 Moz. A large proportion of the drop was attributable to the lead/zinc and gold sectors, where production dipped by a combined 15.9 Moz. On a regional basis, Mexico registered the largest drop in production last year, followed by Australia and Argentina, yet those losses were partially offset by gains in Central and South America and Asia. Even so, Mexico was again the world’s largest silver producing country, followed by Peru, China, Chile and Russia.
Primary silver mine production grew by 1 percent to realize 30 percent of total silver mine output last year. Lead/zinc mines contributed 35 percent of 2016 by-product output, followed by copper mines at 23 percent and gold mining at 12 percent.
Silver scrap supply fell to 139.7 Moz in 2016, a level not seen since 1996, despite higher silver prices. The contraction was largely driven by lower Asian flows, due in part to lower industrial fabrication volumes. Scrap supply from the industrialized world was also muted, as partial jumps in flows from the United Kingdom and Europe in general, offset falls in North America and Japan.
In other areas of silver supply, GFMS reports that again government sales of silver were essentially non-existent last year, while in 2016, delta-adjusted silver hedging by producers contracted by 18.4 Moz.
World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)
Supply
| 2015 | 2016 | |
| Mine Production | 890.8 | 885.8 |
| Net Government Sales | – | – |
| Scrap | 141.1 | 139.7 |
| Net Hedging Supply | 7.8 | -18.4 |
| Total Supply | 1,039.7 | 1,007.1 |
Demand
| 2015 | 2016 | |
| Jewelry | 228.3 | 207.0 |
| Coins & Bars | 290.7 | 206.8 |
| Silverware | 62.9 | 52.1 |
| Industrial Fabrication | 569.6 | 561.9 |
| …of which Electrical & Electronics | 245.9 | 233.6 |
| …of which Brazing Alloys & Solders | 61.5 | 55.4 |
| … of which Photography | 46.6 | 45.2 |
| … of which Photovoltaic | 57.2 | 76.6 |
| … of which Ethylene Oxide | 10.2 | 10.2 |
| … of which Other Industrial | 148.4 | 141.0 |
| Physical Demand | 1,151.5 | 1,027.8 |
| Physical Surplus/Deficit | -111.8 | -20.7 |
| ETP Inventory Build | -17.7 | 47.0 |
| Exchange Inventory Build | 12.6 | 79.8 |
| Net Balance | -106.7 | -147.5 |
| Silver Price, $per oz. | 15.68 | 17.14 |
Silver Price and Investment
The annual average silver price posted an impressive 9.3 percent increase in 2016, its first rise since 2011. Assisting the price was last year’s supply and demand scenario, which led to another annual silver market deficit, the largest in three years and the third largest on record, reaching 147.5 Moz. The average price last year, at US$17.14, registered 28 percent higher than 2007, when the silver price averaged US$13.38.
Identifiable investment, which consists of physical bar investment, coins & medals purchases, and additions or drawdowns to exchange traded products (ETP) holdings, retreated 7 percent from the level achieved in 2015 to 253.8 Moz last year. To put this in a broader context, this level of investment was still 23 percent higher than the average over the decade preceding 2015. Holdings in global ETPs increased robustly by 47 Moz last year, posting an all-time high in October.
Silver coin and medals fabrication fell by 9 percent in 2016, from its record high in 2015, to 123.2 Moz. Even so, coin and medal fabrication was still at its second highest level this century. Silver bar investment fell by 46 percent, mainly the result of lackluster demand in India due to a combination of higher prices, destocking and government measures on unaccounted wealth. Notably, increases in bar demand occurred in Germany and the United Kingdom.
Silver Fabrication Demand
Total physical demand fell by 11 percent in 2016 to 1,027.8 Moz, pulled lower by weaker offtake for jewelry, silverware and retail investment. Industrial applications, the largest component of physical silver demand, accounted for 55 percent of total physical silver demand last year, and were marginally lower by just 1 percent, reaching 561.9 Moz. The United States experienced another healthy rise in this sector, the second in succession, jumping 9 percent over 2015 volumes, while Japan posted a 6 percent rise in silver industrial fabrication. Elsewhere demand was dragged lower by softer economic conditions with declines in China, Africa, South America and Europe.
Silver demand for photovoltaic applications posted a noteworthy 34 percent rise to reach 76.6 Moz. This growth was the strongest since 2010 and driven by a 49 percent increase in global solar panel installations. Silver’s use in the ethylene oxide industry grew at the margin, yet it was a record performance for the sector supported by a 6 percent rise in global capacity.
Silver jewelry fabrication declined 9 percent to 207 Moz from the record level of 228.3 Moz set in 2015. The loss was led by China and India, where jewelry offtake was materially weaker due to higher silver prices and a build-up of stocks. Demand was stronger however in Indonesia, Vietnam, and the United States, which had a 12 percent increase in jewelry fabrication, reaching 16.1 Moz last year. Globally, silverware declined by 17 percent to 52.1 Moz with higher silver prices accounting for the bulk of the fall.
Silver’s use in electrical and electronic applications, as well as its use in brazing alloys, fell last year, victims of a still sluggish global economy. Photographic demand fell by just 3 percent in 2016 to 45.2 Moz, representing the lowest percentage decline since 2004, potentially indicating that the bulk of structural change in the photography market is over and that current fabrication volumes may be largely sustainable.
About the World Silver Survey, the Silver Institute and Survey Ordering Information
The Silver Institute has published this annual report on the global silver market since 1990, to bring reliable supply and demand statistics to market participants and the public. The 27th edition of the Silver Institute’s World Silver Survey was independently researched and compiled by the GFMS team at Thomson Reuters. World Silver Survey 2017 was sponsored by 19 companies and organizations from North and South America, Europe and Asia. Founded in 1971, the Silver Institute is an international industry association. Its members include leading silver producers, refiners, manufacturers and dealers of silver investment products.
Copies of World Silver Survey 2017 are available to the media upon request, and a PDF version can be downloaded from the Institute’s website at www.silverinstitute.org. In North America, hard copies may be purchased by the public from the Institute’s website; for copies outside North America, please contact the GFMS team at Thomson Reuters via GFMS@thomsonreuters.com.
Major Sponsors
- Coeur Mining, Inc.
- Fresnillo Plc
- Industrias Peñoles, S.A.B. de C.V.
- Pan American Silver Corp.
- Silver Wheaton Corp.
General Sponsors
- Barrick Gold Corporation
- Cia. de Minas Buenaventura, S.A.A.
- Endeavour Silver Corp.
- Hecla Mining Co.
- Italpreziosi
- KGHM Polska Miedź S.A.
- Scotiabank
Contributors
- Asahi Refining
- CME Group
- International Depository Services Group
- Republic Metals Corp.
- Tanaka Kikinzoku Kogyo K.K.
- TD Bank
- Valcambi sa
For Further Information Contact:
Mike DiRienzo
The Silver Institute
Tel: +1 202-495-4030
e-mail: mdirienzo@silverinstitute.org
Johann Wiebe
GFMS team at Thomson Reuters
Tel: +44 20 275429389
e-mail: johann.wiebe@thomsonreuters.com
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