The global silver market is forecast to record a second consecutive deficit in 2022, with a multi-decade supply gap of 194-million ounces forecast as demand is set to rise to a new high this year.
According to the Silver Institute’s recently released ‘Interim Silver Market Review’, global demand for the metal will reach a new high of 1.21-billion ounces in 2022 – up 16% from last year.
Industrial demand is on course to grow to 539-million ounces, bolstered by developments such as ongoing vehicle electrification, growing adoption of 5G technologies and government commitments to green infrastructure.
Physical investment in 2022 is on track to jump by 18% to 329-million ounces, which the Silver Institute states would also be a new record. Support has come from investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government and buying on price dips.
Exchange-traded products, however, are forecast to see the biggest yearly decline in holdings totalling 110-million ounces. The institute explains that this is in part owing to silver’s higher volatility than gold, which has made it more vulnerable to profit taking.
Mined silver production is forecast to rise by 1% year-on-year to 830-million ounces, with output from Mexico rising significantly on the back of the continued ramp up of new mines that have come on line in recent years.
Metal Focus, which produces the report, expects the average silver price to ease by 16% this year to $21/oz, the Silver Institute reports.