Silver Demand to Grow 16 Percent in 2022, Reach Record Total

The Silver Institute predicts that the silver industry will finish 2022 with positive results since it will set new demand records driven by the increasing demand, hitting a 16 percent year-over-year growth milestone by the end of the year.

According to the Silver Institute’s Interim Silver Market Review, global silver demand may reach a new high of 1.21 billion oz in 2022, which is 16 percent higher than the figure registered in 2021. Similarly, industrial demand is expected to grow to 539Moz owing to vehicle electrification, the growing acceptance of 5G technologies around the world and governmental commitments to green infrastructure, which according to the Institute will help industrial demand to overcome macroeconomic headwinds and a lower consumer electronics demand.

Additionally, the silver market is likely to present a second consecutive deficit of 194Moz, an amount that will be four times the figure registered in 2021.

Another record the silver industry is expected to break is regarding physical investment, which the Silver Institute believed will grow by 18 percent to 329Moz. According to the Silver Institute, the increase is related to investors’ fears of increasing inflation, the war in Ukraine and purchases on price dips, as well as demand from India, a country that is recovering from a downturn last year.

Mined silver production might rise 1 percent on a year-on-year basis to 830Moz, mostly driven by Mexico and Chile’s positive production performances. The Silver Institute highlighted that Mexico’s production will rise more significantly because of several silver projects that came online and continue to deliver important amounts of silver. In the case of Chile, the byproduct silver production coming from existing and new projects has also contributed to the growth in the production rate. However, the institute considers that there are countries that are partially offsetting the production of silver, like Peru, China and Russia, due to their lower output. 

However, the Silver Institute detected some challenges the industry will face in 2023. According to Metal Focus, the average silver price is expected to ease by 16 percent on a year-on-year basis to US$21/oz. The institute expects the silver price to suffer from the US Federal Reserve lifting the interest rates and the dollar’s strength, as well as from growing fears of a recession. 

Another factor to consider are Exchange-Traded Products (ETPs), which are forecasted to experience the largest annual decline in holdings of 110Moz owing to silver volatility. The Silver Institute highlighted that institutional investors could keep a bearish stance as real yields are likely to strengthen.