The price for silver rose above $30 per ounce (oz) during May for the first time since early 2021. In the past, some would say silver was riding gold’s coattails, but today silver has strong fundamentals on the demand side. In 2023, industrial demand for silver grew to a record level of 654.4 million (oz), according to the Silver Institute. Ongoing structural gains from green economy applications underpinned these advances. Photovoltaic (PV) capacity additions and faster adoption of new-generation solar cells raised global electrical and electronics demand for silver by a substantial 20% over 2022.
Overall, silver demand exceeded silver supply in 2023 for the third consecutive year, resulting in a structural market deficit of 184.3 million oz.
These and many other key aspects of the 2023 silver market are examined in World Silver Survey 2024, released recently by the Silver Institute.
According to the study, total silver demand saw a decline of 7% to 1,195 million oz in 2023; however, this was coming off a record 2022. The price-sensitive physical investment, jewelry, and silverware sectors mainly contributed to last year’s drop.
Chinese silver industrial demand rose by a remarkable 44% to 261.2 million oz, primarily due to growth for green applications, chiefly PV. Last year, China’s rapid expansion of PV production accounted for more than 90% of global panel shipments. Industrial demand in the United States stood at 128.1 million oz, essentially flat over 2022, while Japan’s industrial offtake was also basically unchanged at 98 million oz.
Silver demand for ethylene oxide (EO) catalysts remained robust because of solid gains from capacity expansion. Brazing alloys rose by 2% due to increased mainstream end-uses, including automotive, aerospace, and shipbuilding in most major industrial countries.
Silver jewelry fabrication fell by 13% in 2023 to 203.1 million oz. The losses were concentrated in India, where demand eased after reaching its highest total in 2022. Excluding India, total global losses were modest at 3%. This was mainly due to the weakness of US and European jewelry consumption plus destocking by retailers.
Silverware demand in 2023 fell by 25% to 55.2 million oz. This mainly reflected an elevated base in 2022 when fabrication achieved a record high. As with jewelry, overall losses were almost entirely due to India, owing to high local silver prices.
After five consecutive annual gains, silver physical investment (silver bar and coin demand) fell by almost a third last year to a three-year low of 243.1 million oz. While all significant markets saw losses, the decline was particularly acute in Germany (down 73%) following the Value Added Tax increase at the start of 2023. Most other Western markets saw steep declines due to cost-of-living issues and range-bound prices. However, one partial exception was the US, where losses were smaller at 13%. Physical investment in India was down a hefty 38% as record high rupee silver prices led to profit-taking.
For 2024, total silver supply should decrease modestly by 1%. As a result, this year, the Silver Institute is forecasting a deficit of 215.3 million oz, the second-largest market deficit in more than 20 years.
