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Alberto Abaterusso
Alberto Abaterusso
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The Silver Institute Reports 2017 Global Silver Demand

In 2017 the price of silver decreased by a slim 0.6% to $17.0445 per ounce from the previous year. The supply/demand silver balance closed with a 35.2 million ounces deficit.

April 16, 2018

The Silver Institute published its report on 2017 global demand and supply of silver.

Sustained by a record in the growth of the photovoltaic industry, the industrial demand for the grey metal increased in 2017. That was the first time in five years.

With an aggregate volume of 599 million ounces, the global industrial demand for silver increased by 4% on a year-over-year basis in 2017. That growth was the result of a 19% increase in the photovoltaic demand, which was supported by a strong global growth of installations of solar panels.

Supported by a sturdy growth from China and Japan, the employment of silver in solders and fabrication of hard alloys rose 4% to 57.5 million ounces.

Also, the growth in the demand from the semi-conductor market, helped by a healthier global economy, increased the employment of the precious metal in electrical and electronics applications.

The electrical and electronics segment delivered a volume of 242.9 million ounces of silver consumed in 2017.

The Silver Institute also reports that the use of silver seems to have stabilized in the photography industry (44 million ounces in 2017) and has significantly retreated in the chemical industry.

The chemical industry used about 6.9 million ounces of silver in 2017 mainly as a catalyst for the production of ethylene oxide. Ethylene oxide is an organic compound (a faintly smelling, colorless and flammable gas) that is applied in the production of numerous materials.

On a year over year basis, India and U.S. led the 2% increase in the demand of silver jewelery to 209.1 million ounces in 2017 and the 12% growth in the global demand of silverware to 58.4 million ounces.

On the supply side, a fall in the global mine supply of silver (-4.1% year over year to 852.1 million ounces) together with another loss in the volume of silver scrap (minus 1.6 million to 138.1 million ounces) determined a 26 million ounces physical deficit, exacerbating the balance between supply and demand.

The decline in the global mine supply of silver was mainly due to a series of disruptions in the supply of the grey metal across the Americas and to a fall in the production of silver, both as a primary metal and as a secondary metal in the gold industry. Mexico was the top silver producing country in the world.

The lack of incentives, especially in China, to recycle the scraps was the leading factor for a drop in the supply of the precious metal through this channel.

When ETP inventory and exchange inventory builds are considered, the balance netted a negative 35.2 million ounces.

Silver inventories at the COMEX in the U.S., at the Shanghai Futures Exchange (SHFE) and at the Shanghai gold exchange in China grew 2% from 2016 and at the Tokyo Commodity Exchange gravely fell by 98%. Inventories built under Exchange Traded Product (ETP) holdings shrunk compared to 2016.

In 2017 the accumulation of silver through the purchase of coins, medals, and the investment in bars and related exchange traded product (ETP) holdings totalled 153.5 million ounces. That was a 40% drop from 2016.

The sales of silver by the governments didn’t contribute to the silver market last year.

In 2017 the price of silver decreased by a slim 0.6% to $17.0445 per ounce from the previous year.

(Disclosure: I have no positions in any security mentioned in this article.)

About the author:

Alberto Abaterusso
If somebody asks what being a Value Investor means, Alberto Abaterusso would answer: “the Value Investor is not the possessor of a security that represents the company, but he is the owner of that company. As an owner of the company the Value Investor is actively involved in the dynamics of that company and his first aim is how to have sales progressively growing.”

Alberto Abaterusso would add: “probably the Value Investor is one of the least patient persons in the world concerning sales.”

Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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