Global economic growth was a blessing and curse for 2017 silver demand

April 12, 2018

London (Apr 12)  Global economic growth helped lift industrial demand for silver last year for the first time since 2013, but it also contributed to a steep drop in investment demand for the metal, according to a report from The Silver Institute released Thursday.

Industrial demand for silver — which has industrial, as well as a precious metal, characteristics — grew by 4% to 599 million ounces in 2017, according to a report produced for The Silver Institute by the GFMS team at Thomson Reuters. That was the first rise in four years for silver industrial fabrication, which makes up about 60% of silver offtake.

Silver futures climbed by more than 7% last year. The May silver futures contract SIK8, -1.63% settled at $16.768 an ounce on Comex on Wednesday, up roughly 2.5% for the month so far, but down 2.7% year to date.

Record photovoltaic growth fed the rise in industrial demand, climbing 19% in 2017 to 94.1 million ounces, on the back of a 24% rise in global solar-panel installations, the report said.

“Solar has been the darling of the industry,” Johann Wiebe, lead metals analyst working in the GFMS team at Thomson Reuters, told MarketWatch. Much “like palladium has been [the darling] for the precious-metal industry, solar has been for silver.”

The market saw a ‘considerable drop in the appetite for silver bars and coins due to robust-performing economy growth...’

Johann Wiebe, GFMS team at Thomson Reuters 

Indentifiable investment demand, however, which consists of physical bar investment and coins and medals purchased, as well as net changes to exchange-traded product holdings, dropped by 40% from 2016 to 153.5 million ounces. Coin and bar demand dropped 27% last year to 151.1 million ounces.

The market saw a “considerable drop in the appetite for silver bars and coins due to robust-performing economy growth … which makes the bull-case narrative for investing in precious metals more challenging,” said Wiebe. Given that, there was “a bit of a tightness — a fatigue sort of speak of investors to absorb extra metal.”

All in all, global physical demand for silver fell by 2% last year to an estimated 1.0176 billion ounces, and total silver supply edged down by 1.8% to 991.6 million ounces. That left a total physical silver supply deficit of 26 million ounces.


Silver Phoenix Twitter                 Silver Phoenix on Facebook