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Report: China Will Drive Silver Market Forward

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China will be a major player in the silver market in the years to come, according to a new report by the Silver Institute.  The Chinese impact on silver comes from both the demand and supply sides of the equation.

China is by far the biggest silver consumer in the world. The Chinese account for about 18% of global fabrication demand and serves as a major destination for imported silver products fabricated in the US, Japan and other countries.

Meanwhile, China ranks as the third-largest silver-producing country in the world. 

According to the report released at the 17th China International Silver Conference in Shenzhen, China, the growth in silver demand for electronics and green energy production will be a major driver in the global market.

China consumed an estimated 65 million ounces of silver in solar energy applications last year.

More than 70% of global solar panel production takes place in China and local powder fabricators are only able to satisfy a portion of the essential powder and paste for manufacturing, therefore relying on imported silver to fulfill their requirements. Although policy changes will most likely see volumes decline modestly this year, the long-term uptrend is expected to resume in 2019, assisted by still sizable local installations and strong sales abroad.”

Growth in more traditional electronics production will also fortify demand, according to the report. The Chinese used around 78 million ounces of silver in electronics production in 2017. The largest growth areas are in touch panels, light emitting diodes (LEDs) and equipment used in electricity generation. According to the report, demand in this sector will grow modestly this year.

The Chinese also use a lot of silver in brazing. According to the report, brazing applications relying on silver should experience further gains in the years ahead, as China continues to focus on infrastructure development. Last year, the Chinese consumed about 24 million ounces of silver in brazing applications.

A wide range of end-use applications, including railway infrastructure development, increasing car sales, refrigeration and air conditioning should fuel this growth.”

Jewelry and silverware sales have dropped off in China in recent years. Combined fabrication reached 29 million ounces in 2017. Analysts say changing consumer appetites and anti-corruption legislation on the gifting market have suppressed sales. But the authors of the report say the downtrend is likely near its end.

 In fact, silverware has already turned a corner, while silver jewelry in China is expected to return to positive growth from 2020 onwards.”

The report confirms that despite the recent price drop in silver, the white metal’s fundamentals remain solid. This might be a good time to consider investing in silver. As we reported yesterday, the silver-gold ratio is at 20-plus year highs. This is silver on sale.

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