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Updated: 2015-07-03 - 15:49:00

UC Resources Symbol: UC.V

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Supply & Demand Silver

Demand and Supply in 2010

Demand

Total fabrication demand grew by 12.8 percent to a 10-year high of 878.8 Moz in 2010; this surge was led by the industrial demand category. Last year, silver’s use in industrial applications grew by 20.7 percent to 487.4 Moz, nearly recovering all the recession-induced losses in 2009, and is now seeing pronounced advances in 2011. Jewelry posted a gain of 5.1 percent, the first substantial rise since 2003, primarily due to strong GDP gains in emerging markets and the industrialized world’s improving economic picture. Photography fell by 6.6 Moz, realizing its smallest loss in nine years, as medical centers deferred conversion to digital systems. Silverware demand fell to 50.3 Moz from 58.2 Moz in 2009, essentially due to lower demand in India.

World Silver Demand

Supply

Silver mine production rose by 2.5 percent to 735.9 Moz in 2010 aided by new projects in Mexico and Argentina. Gains came from primary silver mines and as a by-product of lead/zinc mining activity, whereas silver volumes p-roduced as a by-product of gold fell 4 percent last year. Mexico eclipsed Peru as the world’s largest silver producing country in 2010, and Peru is followed by China, Australia and Chile. Global primary silver supply recorded a 5 percent increase to account for 30 percent of total mine production in 2010.

 

Primary silver mine cash costs remained relatively flat year-on-year, falling by less than 1 percent to $5.27/oz. from a revised $5.29/oz. in 2009.

Net silver supply from above-ground stocks increased to 142.9 Moz in 2010, primarily due to higher scrap supply, a shift of net-producer hedging to the supply side, and a considerable rise in net-government stock sales. Regarding scrap supply, 2010 witnessed a 14 percent increase over 2009 as gains in industrial and jewelry recycling exceeded an ongoing decline in recovery from photographic sources.

The swing to net-producer hedging of 61.1 Moz ended a four-year run of de-hedging and is attributed to higher silver prices and was limited to a group of by-product, rather than primary silver producers.

Net government sales of silver rose to 44.8 Moz, primarily the result of increased sales from Russia, with China and India remaining relatively silent for the second consecutive year.

Top 20 Silver Producing Countries in 2010
(millions of ounces)
1. Mexico 128.6
2. Peru 116.1
3. China 99.2
4. Australia 59.9
5. Chile 41.0
6. Bolivia 41.0
7. United States 38.6
8. Poland 37.7
9. Russia 36.8
10. Argentina 20.6
11. Canada 18.0
12. Kazakhstan 17.6
13. Turkey 12.3
14. Morocco 9.7
15. India 9.7
16. Sweden 9.2
17. Indonesia 6.9
18. Guatemala 6.3
19. Iran 3.4
20. South Africa 2.8
Supply from Above-Ground Stocks
(Million ounces) 2009 2010
Bullion    
Implied Net Disinvestment -120.7 -178.0
Net Producer Hedging -22.3 61.1
Net Government Sales 15.5 44.8
Sub-total Bullion -127.5 -72.1
Old Silver Scrap 188.4 215.0
Total 60.9 142.9
 

World Silver Supply and Demand

World Silver Supply and Demand
(in millions of ounces)
  2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Supply
Mine Production 606.2 593.9 596.6 613.0 637.3 641.7 665.4 681.9 718.3 735.9
Net Government Sales 63.0 59.2 88.7 61.9 65.9 78.5 42.5 28.9 15.5 44.8
Old Silver Scrap 189.0 196.3 194.0 195.2 198.6 203.3 199.0 193.7 188.4 215.0
Producer Hedging 18.9 -- -- 9.6 27.6 -- -- -- -- 61.1
Implied Net Disinvestment -- 18.9 1.6 -- -- -- -- -- -- --
Total Supply 877.1 868.3 881.0 879.7 929.5 923.5 907.0 904.5 922.2 1,056.8
 
Demand
Fabrication                    
Industrial Applications 349.7 355.3 368.4 387.4 431.8 454.2 491.1 492.7 403.8 487.4
Photography 213.1 204.3 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.7
Jewelry 174.3 168.9 179.2 174.8 173.8 166.3 163.5 158.3 158.9 167.0
Silverware 106.1 83.5 83.9 67.2 67.6 61.0 58.5 57.1 58.2 50.3
Coins & Medals 30.5 31.6 35.7 42.4 40.0 39.8 39.7 65.4 79.0 101.3
Total Fabrication 873.6 843.5 860.1 850.6 873.6 863.5 870.3 874.7 779.2 878.8
Producer De-Hedging -- 24.8 20.9 -- -- 6.8 24.2 11.6 22.3 --
Implied Net Investment 3.6 -- -- 29.1 55.9 53.2 12.5 18.2 120.7 178.0
Total Demand 877.1 868.3 881.0 879.7 929.5 923.5 907.0 904.5 922.2 1,056.8
Silver Price
(London US$/oz)
4.370 4.599 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193

SOURCE: World Silver Survey 2011