Silver demand soars on emerging technology and green economy needs
Global silver supply is facing the second-largest market deficit in more than 20 years according to a new survey by the Silver Institute.
The newly published World Silver Survey 2024 found that, while there will be a modest 1% decrease in supply of the precious metal, there will still be another large deficit for silver this year of around 215.3 million ounces.
The Silver Institute says demand for silver, which has been growing at record levels in recent years, is being driven by new demand opportunities beyond its traditional applications and expanding role in the energy transition.
Use in new technologies
“For example, silver will become an indispensable material as artificial intelligence (AI) rises,” the survey found.
“End uses expected to incorporate silver in AI include transportation, nanotechnology, biotechnology, healthcare, consumer wearables, computing and energy in data centres.”
The recent record demand levels saw the average silver price grow by 7% in 2023.
The silver price has rallied recently to sit at recent yearly highs.
As of April 12 this year, the silver price has increased 30% since the beginning of this year.
As a result, the gold:silver ratio fell below 82:1, its lowest since early December 2023.
PV demand on the rise
According to the Silver Institute, growing demand for its use in areas such as photovoltaics (PV), silver hit another record in 2023 of 654.4Moz.
Its survey found that ongoing structural gains from green economy applications underpinned the advance—similar to 2022, when the previous record was set.
Higher-than-expected PV capacity additions and faster adoption of new-generation solar cells raised global electrical and electronics demand by a substantial 20%.
Other green-related applications, including power grid construction and automotive electrification, also strengthened demand for silver.
Ongoing shortfall
Overall, silver demand exceeded silver supply in 2023 for the third consecutive year, resulting in a structural market deficit of 184.3Moz.
Chinese silver industrial demand rose by a remarkable 44% to 261.2Moz, primarily due to growth for green applications such as PV.
The survey noted that global silver mine production fell by 1% to 830.5Moz in 2023, with material impact from the four-month suspension of operations at Newmont’s Peñasquito mine in Mexico following a labour strike.
Mexico’s silver output fell by 5% to 202.2Moz.
In addition, lower ore grades and some mine closures negatively impacted production in Argentina, which experienced a 4.9Moz drop in production.
These losses were somewhat mitigated by increased supply from Chile (+10.1Moz) and Bolivia (+3.8Moz).