Silver Prices Averaged 2nd Highest in 2012 & Silver Demand Rising in 2013

Category: Silver Trading April 24, 2013 | Comments Off Share
Silver Prices Averaged 2nd Highest in 2012 & Demand Rising in 2013

Silver Prices Averaged 2nd Highest in 2012 & Demand Rising in 2013

Silver Prices averaged $31.15 per ounce, the second highest on record, due to consistent Investment demand as per a report released by the Silver Institute today.

 The Silver Prices Report by Silver Institute:

Robust global investor demand was the dominant driver of Silver Prices last year, accounting for almost a quarter of total silver demand. Averaging $31.15 per ounce, 2012’s price level was the second highest on record, behind the average reached in 2011. While last year was a volatile year for most precious metals, globally, silver investment rose to a total of 252.7 million troy ounces (Moz). That figure represents approximately $8 billion on a net basis, substantially above the annual average of $1.2 billion over the 2001-10 timeframe, according to “World Silver Survey 2013,” released here today by the Silver Institute.

Silver Investment

Investors remained significant net buyers of silver in 2012, as evidenced by the 21% increase in implied net Silver Investment (which includes physical bar investment, exchange traded funds and fund activity on Comex) to set an all-time high of 160.0 Moz. By comparison, in 2004, the level of implied net silver investment was 5.4 Moz.

Global Silver ETF demand was robust, up by 55.1 Moz last year, hitting a historic high of 631.4 Moz. Total ETF holdings rose to a record $18.9 billion at year-end, up 16% from the figure recorded at year-end 2011.

Buoyant investor interest was also seen in demand for coins & medals at 92.7 Moz in 2012, the third highest level ever recorded. Coin minting in China posted a strong increase, realizing a 47% gain over 2011.

Fabrication Demand

Total silver fabrication demand in 2012 dipped to 846.8 Moz, reflecting losses in key areas. Industrial silver fabrication slipped by 4% to 465.9 Moz, the result of the challenging economic environment seen in many industrialized countries. However, India recorded a 4 percent gain while China experienced a small increase in industrial demand.

Worldwide jewelry fabrication at 185.6 Moz remained effectively unchanged from 2011, thereby proving far more resilient than gold with its 4% decline. Growing consumption in India and China for Silver Jewelry offset softer western markets. Photographic demand for silver fell to 57.8 Moz, while the silverware sector slipped to 44.9 Moz due to ongoing structural factors and economic weakness.

World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)


Supply

2011

2012

Mine Production

757.0

787.0

Net Government Sales

12.0

7.4

Old Silver Scrap

258.1

253.9

Producer Hedging

12.2

-

Implied Net Disinvestment

-

-

Total Supply

1039.4

1048.3


Demand

2011

2012

Fabrication
Industrial Applications

487.8

465.9

Photography

66.1

57.8

Jewelry

186.5

185.6

Silverware

48.3

44.9

Coins & Medals

118.3

92.7

Total Fabrication

907.1

846.8

Producer De-hedging

-

41.5

Implied Net Investment

132.3

160.0

Total Demand

1039.4

1048.3


Mine Supply and Costs

Global silver mine production grew last year to 787.0 Moz, primarily due to by-product output from the lead/zinc sector. Primary silver mine supply grew by 1 percent to account for 28 percent of global silver mine output. Mexico was the world’s largest silver producing country in 2012, followed by China, Peru, Australia and Russia. Primary silver mine cash costs rose to $8.88 an ounce, reflecting higher prices for labor, electricity, and maintenance charges.

Above-Ground Stocks

Supply of silver from above-ground stocks fell by 7.5 percent to 261.3 Moz in 2012, driven by a continued decline in government stock sales, a drop in scrap supply, and the absence of net-producer hedging. Producer de-hedging added 41.5 Moz to the demand equation in 2012. Government stock sales fell a staggering 39 percent to a 15-year low of 7.4 Moz. A continued decline in disposals from Russia and an absence of government stock sales from China and India were the primary factors. A drop in western supplies of recycled jewelry and silverware, combined with further falls from photographic sources, drove silver scrap supply down further by 1.6 percent to 253.9 Moz.

About the “World Silver Survey,” the Silver Institute and “Survey” Ordering Information

The 2013 edition of the “World Silver Survey” was independently researched and compiled by London-based Thomson Reuters GFMS, the leading metals research company. The Silver Institute has published this annual report on the global silver market since 1990, to bring reliable supply and demand statistics to market participants and the public at large.

“World Silver Survey 2013 was sponsored by 24 companies and organizations from North and South America, Europe and Asia. These firms are involved in most aspects of the global silver industry, from mining and refining to trading and manufacturing. Founded in 1971, the Silver Institute is an international industry association. Its members include leading silver producers, refiners, manufacturers and dealers.

Silver Demand seen rising in 2013 on Industries, Investment-GFMS:

A pick-up in manufacturing activities and an overall improvement in the global economy should help silver’s fabrication demand recover this year, respected precious metals research firm Thomson Reuters GFMS said in a report on Wednesday.

Strong buying of Silver Coins and Silver Bars by bargain hunters after a sharp price fall this month is expected to underpin investment demand, which may hit an all-time record, said Neil Meader, head of precious metals research and forecasts at Thomson Reuters GFMS. “The fact that we have global growth accelerating into next year means we should get a relatively strong response from industrial demand,” Meader told Reuters in a phone interview prior to the release of the firm’s World Silver Survey on Wednesday.

Silver fabrication demand, which includes industrial applications, photography, jewelry, silverware and coins and medals, fell around 7 percent to 26,339 tons in 2012, the report showed. Industrial applications fell 4.5% to 14,490 tons last year, while jewelry demand was down less than 1% year-on-year to 5,771 tons.

An increase in silver industrial demand will depend on the extent of economic recovery in Europe, offsetting losses in the photovoltaic sector as governments subsidize less on solar panel production, Meader said. The United States and China by far consumed the most silver for industrial applications in 2012, the report showed. Silver jewelry, the second largest demand component after industrial applications, should post decent growth this year as long as there is no major hike in silver prices, Meader said.

Demand for Silver Coins Soars:

An encouraging sign in the Silver Market so far in 2013 has been very strong demand in physical investment products such as coins, bars and silver exchange-traded funds. Sales of U.S. Mint’s American Eagle Silver Coins have been higher year to date compared with the same period last year, while holdings in top silver ETFs monitored by Reuters hovered near their all-time high set in March. U.S. Gold and Silver Coins have been flying off dealers’ shelves this week as retail investors snapped up bargains since the metal’s historic plunge in price.

The price for the white metal fell $5, or 20 percent, to $22 an ounce over a two-day period earlier this month, following gold’s meltdown as investors liquidated bullish bets en masse after months of disappointment over the yellow metal. The white metal, whose price tends to be positively linked with that of gold, traded at around $23 an ounce on Tuesday. “We see a lot of bargain hunting coming through in the wake of the recent price drop, so it’s quite likely that we would see decent (silver coin) recovery in the calendar year 2013 in comparison to 2012,” Meader said.

Demand for Silver Coins and medals fell 22 percent to 2,884 tonnes last year, down from a record level of 3,679.5 tons in 2011, when silver soared to a record high near $50 an ounce, only to fall back 30 percent in 10 days. “If we stay on this track, silver coin and medals demand could be getting past the 2011 record,” Meader said.

-          Reuters


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