Silver demand surging to its highest since 2015 - Silver Institute

By Peter Hobson

LONDON, April 22 (Reuters) - Global silver demand will rise this year to its highest since 2015 as jewellery and industrial offtake rebounds after the coronavirus pandemic, helping to lift prices, the Silver Institute said in a report on Thursday.

Silver is used in the manufacturing of goods from solar panels to consumer electronics, and is also bought by investors who traditionally see it as a safe store of wealth.

The pandemic triggered a rush of investor stockpiling but curtailed demand from industry and jewellers, particularly in India, one of the most important markets.

All demand segments except for exchange traded funds (ETFs), which store silver for investors, will use more this year, and even ETFs will buy far more than was typical before the pandemic, the report said.

Excluding ETFs, global silver demand will rise to 1.033 billion ounces in 2021 from 896.1 million ounces last year, according to the report compiled for the institute by consultants Metals Focus.

Silver supply will rise to 1.056 billion ounces from 976.2 million ounces in 2020, implying oversupply of 23.3 million ounces this year - the sixth consecutive annual surplus, though down from 80.1 million ounces in 2020.

The report excludes ETFs from its physical demand figures because they do not remake silver into products, but only store wholesale silver bars.

ETFs will stockpile 150 million ounces this year, down from 331.1 million ounces in 2020, the report said. If those numbers are added to physical demand, the market will be undersupplied by 126.7 million ounces after a 251 million ounce deficit in 2020.

Silver prices XAG=, currently around $26 an ounce, will average $27.30 an ounce this year, up from $20.55 in 2020 and the highest annual average since 2012, the report forecast.

Strong industrial and jewellery demand will provide a floor for the market but investor demand will be the biggest factor determining prices, said Metals Focus director Philip Newman.

SILVER SUPPLY AND DEMAND (million ounces)

2019

2020

2021F

% change 19-20

% change 20-21

SUPPLY

Mine Production

833.2

784.4

848.5

-6%

8%

Recycling

170.5

182.1

196.2

7%

8%

Net Hedging Supply

13.9

8.5

10.0

-39%

18%

Net Official Sector

1.0

1.2

1.5

18%

27%

TOTAL SUPPLY

1,018.7

976.2

1,056.3

-4%

8%

DEMAND

Industrial

514.6

486.8

524.0

-5%

8%

- of which photovoltaics

98.7

101.0

105.0

2%

4%

Jewellery

200.3

148.6

184.4

-26%

24%

Photography

32.7

27.6

28.8

-16%

4%

Silverware

62.1

32.6

43.1

-48%

32%

Bar & Coin

185.7

200.5

252.8

8%

26%

TOTAL DEMAND

995.4

896.1

1,033.0

-10%

15%

MARKET BALANCE

23.3

80.1

23.3

244%

-71%

ETFs

83.3

331.1

150.0

298%

-55%

BALANCE LESS ETFs

-60.0

-251.0

-126.7

319%

-50%

Average price $/oz

16.21

20.55

27.30

27%

33%

Global silver demandhttps://tmsnrt.rs/3n7jR0s

(Reporting by Peter Hobson; Editing by Jan Harvey)

((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))

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