Every key area of silver demand is forecast to rise in 2021, including a record total for industrial demand, despite ongoing supply chain challenges, reported Philip Newman, managing director at Metals Focus, and Adam Webb, director of mine supply, during the Silver Institute’s Interim Silver Market Review webcast, which featured historical supply and demand statistics and estimates for 2021. The following highlights were presented:

Global silver demand is set to reach 1.029 billion ounces (oz). The recovery in silver industrial demand from the pandemic will see this segment achieve a new high of 524 million oz. Photovoltaic demand is expected to rise by 13% to more than 110 million oz, a new high that highlights silver’s key role in the green economy. This will also underpin much of the forecast 10% gain in electrical/electronics offtake. Finally, brazing alloy and solder demand is set to improve by 10% in 2021, helped by a recovery in housing and construction, although this will still fall short of pre-pandemic levels.

Physical investment in 2021 is on course to increase 32%, or 64 million oz, year-on-year to a six-year high of 263 million oz. The strength will be driven by the U.S. and India. Building on solid gains last year, U.S. coin and bar demand is expected to surpass 100 million oz for the first time since 2015. Growth began with the social media buying frenzy before spreading to more traditional silver investors. Indian demand reflects improved sentiment toward the silver price and a recovering economy. Overall, physical investment in India is forecast to surge almost threefold this year, having collapsed in 2020.

Exchange-traded products are forecast to see total holdings rise by 150 million oz this year. As a result, combined holdings will have risen by a dramatic 564 million oz over the past three years. During 2021 and through to November 10, holdings rose by 83 million oz, taking the global total to 1.15 billion oz, close to its record high of 1.21 billion oz, which occurred on February 2, at the height of the social media storm.

In terms of the full-year price average, Metals Focus expect silver to rise by 24% year-on-year to $25.40/oz. This would achieve the highest annual average since 2012’s $31.15/oz.

In 2021, mined silver production is expected to rise by 6% year-on-year to 829 million oz. This recovery is largely the result of most mines being able to operate at full production rates throughout the year following enforced stoppages in 2020 due to the pandemic.

Overall, the silver market is expected to record a physical deficit in 2021, albeit modestly. At 7 million oz, this will mark the first deficit since 2015.