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Commodities Corner: Global industrial demand for silver hits record in 2021, and is set to extend gains this year

Global industrial demand for silver climbed to its highest level on record in 2021, and is likely to mark another all-time high this year, according to a report from The Silver Institute released Wednesday morning.

Silver’s use in industrial applications rose 9% to an all-time high of 508.2 million ounces in 2021, getting a lift from the start of an economic recovery from COVID, as industrial operations resumed and businesses reopened, said The Silver Institute’s latest World Silver Survey, produced by researchers at Metals Focus.

The market had already seen silver industrial demand start to recover during the second half of 2020 and “last year saw a continuation of much of this trend,” Philip Newman, managing director at Metals Focus, told MarketWatch. Industrial demand also managed to reach a new high despite the ongoing chip shortage and other supply-related disruptions, he said.

Silver use in photovoltaics, which is the conversion of sunlight into electricity, grew as new installations reached a new high last year, said Newman. “Demand for consumer electronics also continued to grow, reflecting ongoing and healthy demand for stay-at-home working.”

Investment in physical silver, comprised of sales in coins and bars, jumped 36% to 278.7 million ounces, the highest since 2015, buoyed by safe-haven and inflationary concerns, according to the report.

All categories of global silver demand, which include industrial, investment and jewelry, strengthened last year — taking total demand to 1.05 billion ounces, up 19% from 2020, the report said.

Looking ahead, the report said Metals Focus forecasts a 5% climb in total global silver demand for 2022 to about 1.10 billion ounces, including a 6% climb in silver industrial demand to 539.6 million ounces. It cited further structural advancements in industrial fabrication for the expected increase in demand.

At the same time, it expects higher mine production of silver amid ramp-ups in projects and gains in output among established mines, as well as a rise in industrial recycling. Together, those may drive a 3% rise in global 2022 supplies to 1.03 billion ounces, the report said.

Physical silver investment, however, is “likely to be broadly flat this year, as a modest fall in western investment will be offset by further gains in India,” the report said.

The report pegged the 2022 annual average silver price forecast at $23.90 an ounce, which would represent the second-highest annual average since 2011.

On Tuesday, May silver

the most-active futures contract, settled at $25.391 an ounce, down 76 cents, or 2.9%.

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