All major silver demand categories achieved record highs in 2022, pushing total silver demand to a new high of 1.242 billion ounces (Boz) last year. Silver industrial demand rose by 5 percent, physical investment increased by 22 percent, and jewellery and silverware rose by 29 and 80 percent, respectively, leading to the total global silver demand milestone. Since 2020, the global total has increased by 38 percent as world economies recover from the pandemic.
Along with record silver demand and lower mine production, the silver market achieved its second consecutive annual structural deficit, at a significant 237.7 million ounces (Moz) last year.
These and other important drivers of the 2022 silver market are examined in World Silver Survey 2023, released today by the Silver Institute. The Survey also provides insights and an outlook for this year's silver market. The Survey was researched and produced for the Silver Institute by Metals Focus, the London-based independent precious metals consultancy.
Following a strong recovery in 2021, total silver demand took a major leap last year, with total offtake growing by 18 percent to 1.242 Boz. With the exceptions of slight drops in photographic and brazing alloys demand, all other fabrication sectors achieved new highs. Demand from the industrial segment posted another record in 2022, of 556.5 Moz. Some of these gains reflected green economy applications, particularly the significant growth in photovoltaics (P.V.), which consumed 140.3 Moz of silver in 2022.
Industrial demand was also supported by electrification within the automotive segment and other power generation and distribution investments. A rise in vehicle output, 5G network investments, and growth in the construction industry also assisted this segment. Similarly, other industrial demand fabrication rose, chiefly due to increased demand for ethylene oxide (E.O.) catalysts. The overall total was also helped by thrifting and substitution (outside of P.V.) remaining modest. Apart from a 6 percent decline in Europe, all regions saw growth. India led with a 24 percent jump, followed by East Asia at 7 percent and North America at 6 percent.
Silver jewelry fabrication soared 29 percent to a record level last year at 234.1 Moz. This was led by India, where pent-up demand, combined with heavy re-stocking by retailers and a move to higher purities, saw volumes double compared to 2021. Notable gains were also seen in Europe, where higher consumption helped even as exports from Italy fell. Exceeding jewelry in percentage terms, silverware demand in 2022 saw astounding growth of 80 percent to 73.5 Moz, a record high. As with jewelry, gains in silverware were almost entirely due to India, where demand more than doubled last year on the back of employment and incomes returning to pre-pandemic levels.
Global mine production fell marginally last year to 822.4 Moz. This followed strong growth in the previous year when production rose by nearly 6 percent as mines recovered from the disruption caused by the pandemic. Last year's decline resulted from lower by-product output from lead/zinc mines, particularly in China and Peru. Production from primary silver mines was almost flat year-on-year, rising by just 0.1 percent to 228.2 Moz. Peru suffered the most significant decline at -8.5 Moz due to mine suspensions, falling grades at several major mines, and disruption due to social unrest. Mexico's production, however, grew by 3.1 Moz, Argentina's by 3.0 Moz, and Russia's by 2.2 Moz.
Recycling activity rose for a third year in a row, with the 3 percent lift taking the total to a 10-year high of 180.6 Moz. This was driven by the 7 percent rise in industrial scrap, which reflected an increase in the processing of spent E.O. catalysts. However, jewelry and silverware recycling had only marginal gains.
Silver Investment and Price
Net physical silver investment rose for a fifth consecutive year to a new high of 332.9 Moz. India emerged as the top performer last year, registering a staggering 188 percent increase with silver investment benefiting from lower prices and bargain hunting. There was modest growth in the U.S., where the market contended with prolonged product shortages and exceptionally high premiums. Australian physical investment rose by 15 percent, while European demand was flat last year as Germany, its largest market, grappled with an unexpected and sudden VAT change.
Silver Market Deficit
Record global silver demand and a lack of supply upside contributed to last year's 237.7 Moz market deficit, the second consecutive annual deficit, possibly the most significant deficit on record. Of note, the combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years.
Outlook for 2023
This year is expected to be another of solid silver demand. Industrial fabrication should reach an all-time high, boosted by continued gains in the P.V. market and healthy offtake from other industrial segments. Although bar & coin demand and jewelry fabrication are expected to fall short of last year's exceptional levels, both are forecast to remain historically high. Supply, by contrast, is expected to achieve only low single-digit gains. As a result, this year will also see another large deficit for silver, amounting to a projected 142.1 Moz, which would be the second-largest deficit in more than 20 years. Adding up the supply shortfalls of 2021-2023, global silver inventories by the end of this year will have fallen by 430.9 Moz from their end-2020 peak. To put this into perspective, it is equivalent to more than half of this year’s forecasted annual mine production, and more than half of the inventories presently held in London vaults offering custodian services.
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