Silver touches new highs

The World Silver Survey released in May reports that the global demand for silver bullion has risen to a record high in 2013, on account of significant growth in silver fabrication, silver coin and strong jewellery demand.

The World Silver Survey found that in 2013 total physical silver demand rose by 13 per cent to just over a billion ounces, an all-time high that was mainly driven by a 76 per cent increase in retail investment in bars and coins, coupled with a sturdy recovery in jewellery and silverware fabrication.

Prepared by research firm Thomson Reuters GFMS for The Silver Institute the report found that the largest component of physical silver demand, industrial applications, dipped by less than one per cent to 586.6-million ounces, to account for 54 per cent of total physical silver demand.

Silver industrial demand in Asia increases

Asia experienced a three per cent increase in silver industrial demand, led by China, where a continued recovery in the electrical and electronics sector, along with gains in the Chinese ethylene oxide industry, took total Asian industrial off take to a new high. Japan also experienced gains in silver industrial demand. Last year’s recovery in jewellery fabrication was a reflection of the improved economic outlook in the industrialised world, which lifted consumer confidence and retail sales for a 10 per cent increase in jewellery demand at 198.8-million ounces.

Global silverware fabrication rose 12 per cent to a three-year high of 50-million ounces, on the back of strong gains in India and China. Photography demand slipped by seven per cent to 50.4-million ounces in 2013, posting the slowest percentage decline in nine years.

Global supply declines

The global supply of the grey metal declined by 2.7 per cent in 2013, to 978.1-million ounces, impacted mainly by a 24 per cent, or 60.8-million-ounce slide in silver scrap. Scrap supply to the market in 2013 experienced the largest year-on-year reduction since the 1980s and was owing to a combination of softer silver prices and an exhaustion of ‘distressed coin and jewellery recycling. As a proportion of total silver supply, scrap dropped to under 20%, after averaging 25% in total supply the previous two years, and this served as a substantial contributor to the physical market deficit posted in 2013.

The net balance had grown by 47-million ounces to 113.3-million ounces. The silver price averaged US $23.79/oz last year, the third-highest nominal average price on record, but still down 24 per cent year-over-year in a particularly volatile time for the entire precious metals complex, the report had found.

Silver mine production grew by 3.4 per cent to reach 819-million ounces. A large portion of the growth was attributable to the primary silver mining sector, which experienced strong growth from the start, along with the ramp-up of operations that entered production in recent years.

Primary silver mine output grew six per cent, and accounted for 29 per cent of global silver mine supply. Mexico was the world’s leading silver producer, followed by Peru, China, Australia and Russia. Primary silver mine cash costs stood at US $9.27/oz, up one per cent in dollar terms. The producer silver hedge book was aggressively reduced last year to stand at 15-million ounces on a delta-adjusted basis. Supply from above-ground stocks dropped by 23.2 per cent to 199.7-million ounces.

The report found that the total identifiable investment demand, which includes physical bar investment, coins and exchange traded funds (ETF) inventories, rose by 27 per cent to a three-year high at 247.2-million ounces last year. The growth was driven mainly by a strong rise in retail purchases of silver bars and coins.

Demand for physical bullion bars more than doubled last year to reach a high of 127.2-million ounces, while purchases of silver coins and medals rose 38 per cent to a record 118.5-million ounces. ETF holdings showed only modest growth in 2013, adding 1.6-million ounces, compared with adding 157.8-million ounces in 2006.

India’s silver jewellery exports records significant jump

The silver jewellery exports from India recorded significant jump of 75.4 per cent year-on-year to US $1,459.87 Million (Rs. 8,798.89 Crore) during the period from Apr 13 to Mar 14 while its gold jewellery tumbled by 32.99 per cent year-on-year to US $7,869.70 Million, in accordance with the latest data released by the Gems and Jewellery Export Promotion Council (GJEPC).

In brief, the figures released by the country’s Export Promotion Council demonstrate robust growth in exports of Silver Jewellery, whereas a sharp decline in exports of Gold Jewellery, Gold Medallions and Coins during the twelve month period from April 2013 to March 2014.