Silver demand set a record in every category last year based on final data released by the Silver Institute this week.
Total global silver demand in 2022 came in at a record $1.242 billion ounces. This represented an 18% increase in silver demand over 2021.
Net physical silver investment rose for a fifth consecutive year to a new high of 332.9 million ounces. Silver investment in India charted a staggering 188% increase over 2021 with lower prices and bargain hunting driving demand higher. There was modest demand growth in the US despite ongoing supply shortages that drove premiums exceptionally high – especially on American Silver Eagle coins.
Industrial demand posted a record of 556.5 million ounces in 2022. Green energy initiatives helped drive industrial offtake higher. Photovoltaics (PV) alone consumed 140.3 million ounces of silver.
Demand for silver in the solar energy sector is expected to continue to grow. According to a study by scientists at the University of New South Wales, solar manufacturers will likely require over 20% of the current annual silver supply by 2027. And by 2050, solar panel production will use approximately 85–98% of the current global silver reserves.
Electrification within the automotive segment, along with other power generation and distribution investments also supported industrial demand.
Silver jewelry fabrication increased by 29% year-on-year to a record 234.1 million ounces. India led the way, with demand doubling year on year.
Meanwhile, silverware demand in 2022 charted an even bigger spike of 80% to 73.5 million ounces, another record high.
While demand for silver soared, supply was flat last year.
Mine output dropped by 0.6% to 822.4 million ounces. Production from primary silver mines was almost flat year-on-year, rising by just 0.1% to 228.2 million ounces. Lower by-product output from lead and zinc mines, particularly in China and Peru, drove overall mine output down.
A modest increase in recycling offset the decrease in mine output.
Record global silver demand and a lack of supply upside contributed to last year’s 237.7 million ounce market deficit. It was the second consecutive annual deficit in a row. The Silver Institute called it “possibly the most significant deficit on record.” It also noted that “the combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years.”
Looking ahead to 2023, the Silver Institute projected “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 PV market and healthy offtake from other industrial segments.”
The report noted that silver coin and silver bar demand, along with the demand for silver in jewelry fabrication would likely fall short of the 2022 record but they are all forecast to remain historically high.
Meanwhile, supply growth in 2023 will likely not exceed single digits.
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.”
You can download the Silver Institute’s full report HERE.
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