Informist, Wednesday, Nov. 13, 2024

MUMBAI – The global silver market will remain in deficit for the fourth consecutive year in 2024, but the deficit will narrow to an estimated 182 million ounces from 189 million ounces in 2023, the Silver Institute said in a report. Silver prices have gained 29% year-to-date as of Nov. 11 and the gold-silver ratio has stayed between 80 and 90 so far this year, it said.

The global silver demand is projected to rise 1% to 1.21 billion ounces this year. "Record industrial demand and a recovery in jewellery and silverware will lift demand to 1.21 billion ounces in 2024, while mine supply will rise by just 1%, making the 2024 the second highest in Metals Focus’ data series," it said.

The white metal industrial demand is expected to grow 7% to surpass 700 million ounces for the first time on record. The key drivers for this growth are gains from the green economy, in photovoltaics, as well as increased demand from automotive sector such as rising electrification of powertrains and ongoing investments in infrastructure, such as charging stations.

"While a challenging macro backdrop has weighed on sales of consumer electronics, the rapid adoption of AI (artificial intelligence) technologies has resulted in a growing need for technological upgrades, replacements and new infrastructure investment, all of which have assisted silver demand," the global body said.

Physical investment for silver is forecast to fall 15% on year to 208 million ounces, a four-year low, due to weak coin and bar demand in the US. The physical demand in India is expected to enjoy higher bar and coin sales, thanks to bullish price expectations and a cut in the import duty on silver bullion.

Silver jewellery demand is likely to rise 5% on year to 212 million ounces, while silverware demand is set to jump 5% on year to 58 million ounces in 2024. India has been the key growth contributor, with strong sales between late July and early September when the import duty cut coincided with a pullback in the dollar silver price.

The jewellery demand is also expected to grow in the US, which also benefits key Asian and European exporters.

Silver exchange-traded products are projected to see their first annual inflows in three years at 100 million ounces as expectations of Federal Reserve interest rate cuts, dollar weakness and falling yields have raised silver's investment appeal. "Investor interest has also benefited from silver's breakout of rangebound trading. At end-October, global holdings were at their highest since July 2022, up by 78 million ounces or 8% from year-end-2023," it said.

Global mined silver output is expected to rise 1% on year to 837 million ounces because growth in Mexico, Chile, and the US outpaces lower output from Peru, Argentina, and China.

Silver production in Mexico is forecast to increase by 10 million ounces, up 5% on year, to 209 million ounces. "This will be driven by higher mill throughput and grade at Pan American Silver's La Colorada operation, following upgraded ventilation infrastructure. Output will also be boosted by a recovery in production from Newmont's Peasquito mine," the report said.

The average all-in-sustaining costs for primary silver mines decreased in Jan-Jun because continued high silver prices offset production costs and larger royalty payments. A slowdown in the rise in input costs was compounded by higher by-product revenue, helping even high-cost producers in the 90th percentile to record positive margins.

At 1045 IST, silver prices on the COMEX was $31.05 per ounce, up 1% from the previous close. End

US$1 = INR 84.40

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Sandeep Sinha

Edited by Akul Nishant Akhoury

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