Silver Industrial Demand Hits Record High, Up 11% In 2023

(April 18, 2024 - Mining Review Africa)

In 2023, silver industrial demand surged by 11%, hitting a new record of 654.4 million ounces. Photovoltaic (PV) usage alone soared by 64%, surpassing expectations. Green economy applications were the driving force behind this growth, particularly in electrical and electronics, power grid construction, and automotive electrification.

With demand consistently outpacing supply for the third year in a row, the market faced a structural deficit of 184.3 Moz. The World Silver Survey 2024, released by the Silver Institute, examines key aspects of the 2023 silver market and provides an outlook for this year. It was produced by London-based precious metals consultancy

Some of the key findings include:

Silver demand

Silver demand declined by 7% to 1,195 Moz in 2023, largely due to price-sensitive sectors like physical investment, jewellery, and silverware. However, industrial demand reached a record high, primarily in the electrical and electronics sector, which grew by 20% to 445.1 Moz. This growth is attributed to silver’s growing use in photovoltaics (PV), which reached a new high of 193.5 Moz.

Chinese silver industrial demand increased 44% to 261.2 Moz, primarily due to green applications, particularly PV. China’s rapid expansion accounted for 90% of global panel shipments in 2022. US demand remained steady at 128.1 Moz, while Japan’s offtake remained unchanged.

Silver demand for ethylene oxide (EO) catalysts remained strong due to capacity expansion, while brazing alloys saw a 2% increase in mainstream end-uses like automotive, aerospace, and shipbuilding.

In 2023, silver jewellery fabrication decreased by 13% to 203.1 Moz, primarily in India. Global losses were modest at 3%, mainly due to weak US and European jewellery consumption and destocking by retailers.

Silverware demand in 2023 fell by 25% to 55.2 Moz. This mainly reflected an elevated base in 2022, when fabrication achieved a record high. As with jewellery, overall losses were almost entirely due to India, owing to high local silver prices.

After five consecutive annual gains, silver physical investment fell by nearly a third last year, reaching a three-year low of 243.1 Moz. Germany experienced the most severe decline, with a 73% drop following the value-added tax increase. Most Western markets experienced steep declines due to cost-of-living issues and range-bound prices. The US saw a smaller loss at 13%. India’s physical investment dropped 38% due to record high rupee silver prices and limited bargain hunting opportunities.

World silver supply and demand. Photo: Screenshot

Silver supply

Global silver mine production fell by 1% to 830.5 Moz in 2023. Output was significantly affected by the four-month suspension of operations at Newmont’s Peñasquito mine in Mexico following a labour strike. Mexico’s silver output fell by 5% to 202.2 Moz. In addition, lower ore grades and some mine closures negatively impacted production in Argentina, which experienced a 4.9 Moz drop in production, Australia at -3.1 Moz, and Russia at -1.4 Moz. However, these losses were somewhat mitigated by increased supply from Chile at +10.1 Moz and Bolivia at +3.8 Moz.

Last year, Mexico was the leading silver mining country, followed by China, Peru, Chile, and Bolivia.

Silver recycling, which accounted for 18% of total supply last year, grew by 1% to 178.6Moz. Much like in 2022, the industrial sector was the primary driver of volumes, which in turn was due to growth in the recycling of EO catalysts.

Outlook for silver in 2024

This year is expected to be a strong year for total silver demand, with a 2% growth forecast. Industrial fabrication is expected to reach an all-time high of 9%, driven by a 20% PV market gain and healthy offtake from other industries.

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Silver supply is expected to decrease by 1% this year, resulting in a projected 215.3 Moz deficit, the second-largest market deficit in over 20 years.

Silver’s potential in the energy transition and beyond traditional applications is significant, with its incorporation in AI, transportation, nanotechnology, biotechnology, healthcare, consumer wearables, computing, and data centre energy becoming indispensable materials.

Silver price

The average silver price increased by 7% in 2023, reaching a 30% increase as of April 12, causing the gold-silver ratio to drop below 82:1, its lowest since early December 2023.