Silver Demand Hit 6-Year High in 2021; Growth Expected to Continue Despite Headwinds

The Silver Institute has released its World Silver Survey 2022 report, providing an overview of what happened in the silver market in 2021 and looking ahead to this year.

Even with geopolitical and economic headwinds, the report anticipates further growth in the silver market in 2022.

Last year, the global silver market realized growth in every demand category, marking the first time all key sectors rose in tandem since 1997.

Total global silver demand hit its highest level since 2015, surging 19% to 1.05 billion ounces (Boz) in 2021 and charted an all-time high for use in industrial applications, rising 9% to 508.2 million ounces (Moz).

Sales of silver coins and silver bars leaped by 36% to 278.7 Moz, its highest level since 2015. Motivated by safe-haven and inflationary concerns, retail investors in North America and Europe took advantage of periodically lower silver prices to purchase coins and bars.

Of note, last year, the silver market experienced its first deficit since 2015, at 51.8 Moz, its most significant shortage since 2010.

Silver’s use in the solar sector increased 13 percent to 113.7 Moz as global solar installations grew, while electronic and electrical demand overall rose by 9 percent to 330 Moz. Last year silver also saw rising end-use in the defense and aerospace sectors. Brazing and alloys accounted for 47.7 Moz, representing a 6 percent gain over 2020.

Looking Ahead

According to the Silver Institute, geopolitical and economic issues, including the Russian invasion of Ukraine, multi-decade-high inflation, lower global growth projections, and increasing interest rates, present challenges to forecasting precious metals this year.

Nevertheless, Metals Focus forecasts a 5% rise in global silver demand due to further structural advancements in industrial fabrication, which is expected to achieve another record high in 2022. Jewelry and silverware demand should continue their post-pandemic recovery this year.

On the supply side, higher mine production is also expected due to project ramp-ups and some gains in established mines’ output, coupled with a rise in industrial recycling, to drive a 3% increase in global supply in 2022.

Physical silver investment is likely to be broadly flat this year, as a modest fall in western investment will be offset by further gains in India.

Investment in ETPs is forecast to increase by 25 Moz for a fourth consecutive annual rise. The average yearly silver price is forecast at US$23.90, which, if realized, would represent the second-highest annual average since 2011.