Industrial Silver Demand on Pace to Set a New Record

Industrial demand for silver is on track for a new record high in 2024, and the silver market is on pace for its fourth consecutive annual supply deficit. 

According to the latest projections by Metals Focus for the Silver Institute, record industrial offtake, along with a rebound in the silver jewelry and silverware markets, will drive total demand to 1.21 billion ounces this year. That would represent a 1 percent year-over-year increase. 

Industrial demand is expected to rise by 7 percent this year and surpass 700 million ounces for the first time. Industrial demand for silver set a record of 654.4 million ounces in 2023. As was the case last year, silver offtake for green energy applications is driving the increase in industrial demand.

The solar energy sector is using increasingly large amounts of silver. Silver is the best conductor of electricity of all metals at room temperature, making it a vital input in the production of solar panels. 

According to a research paper by scientists at the University of New South Wales, solar manufacturers will likely require over 20 percent of the current annual silver supply by 2027. By 2050, solar panel production will use approximately 85–98 percent of the current global silver reserves.

The green energy sector is also essentially recession-proof because it is being driven, incentivized, and, in some cases, directly funded by governments around the world. 

Silver jewelry fabrication has rebounded this year, and according to the Silver Institute, silver demand for jewelry is projected to rise by 5 percent. 

Silverware demand is also expected to chart a similar percentage gain. 

Indian demand has driven growth in both segments. Sales were particularly strong between late July and early September after the Indian government slashed its import duty on gold and silver.

Jewelry consumption is also on pace to increase in the U.S. This is expected to benefit key Asian and European exporters.

Investment demand for physical silver is the only market segment expected to contract in 2024. It is forecast to fall by 15 percent to a four-year low of 208 million ounces.

Losses are concentrated in the U.S., where coin and bar sales are on track for a 40 percent decline to the lowest level since 2019. Physical silver investment demand in Europe has also slowed.

On a positive note, India is expected to chart higher bar and coin sales thanks to bullish price expectations and the aforementioned cut to the import duty. 

But investors aren't completely sitting on the sideline. There has been increased interest in silver-backed ETFs. Exchange-traded funds are on pace to record their first annual net inflow of metal in four years. According to the Silver Institute, "Expectations of Fed rate cuts, periods of dollar weakness, and falling yields have raised silver’s investment appeal. Investor interest has also benefited from silver’s breakout of rangebound trading."

On the supply side, mine output is expected to grow by about 1 percent, and recycling is set to expand by 5 percent, hitting a 12-year high.

With both demand and supply increasing, the market deficit is expected to come in at around 182 million ounces. This is in line with the supply shortfall in 2023. According to the Silver Institute, this market deficit is "elevated by historical standards."

The Silver Institute expects market deficits to continue into the foreseeable future. 

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