Mounting Silver Demand Forecast 2021!
Led by industrial use and physical silver investment, global silver demand is projected to achieve an eight-year high of 1.025 billion ounces in 2021, according to an analysis published by the Silver Institute on February 10.
Strong investment demand is expected to push silver prices higher in 2021.
Physical investment, which covers silver bullion coin and bar purchases, is expected to achieve a six-year high in 2021 of 257 million ounces (Moz), as investors continue to add silver to their investment holdings. Already this year, holdings in exchange traded products reached a record level on February 3 of 1.18 billion ounces.
One caveat: If the global economic recovery from the pandemic proves to be slower than expected, this could weigh on base metal prices, which could, in turn, encourage investors to reduce their exposure to silver.
Industrial demand is projected to post a four-year high in 2021 of 510 Moz, a 9 percent increase over 2020 figures. Demand from the electrical and electronics sector is poised to account for the bulk of these gains. With the growing penetration of 5G technology in consumer electronics this sector is expected to drive strong gains for silver offtake, with a 7 percent increase over 2020 to 300 Moz for silver’s use in the sector.
The photovoltaic (PV) sector staged a strong recovery in the second half of 2020, and this momentum should carry through 2021. The global total for the sector is forecast at 105 Moz in 2021, overcoming the losses sustained last year.
Although silver loadings continue to drift lower, the sector will benefit from a growing number of countries that are installing new PV capacity. Silver’s use in the automotive market should also rebound strongly in 2021, to just over 60 Moz, benefiting from the growing electrification of vehicles.
Global jewelry demand is forecast to rebound to 174 Moz but remain below pre-COVID levels. To a large extent, this reflects only a modest recovery in India, where demand will be affected by high and volatile rupee silver prices. A similar outcome emerges in silverware, which is dominated by the Indian market.
Even though total silverware fabrication is predicted to achieve a double-digit percentage gain this year, reaching 45 Moz, the global total will remain considerably short of 2019 levels because of the challenges in India.
Metals Focus, the respected global precious metals research consultancy, contributed to this analysis. The firm will research and produce the Silver Institute’s annual report on the international silver market, World Silver Survey 2021, which will be released in April.