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Silver Supply Will Drop in 2015 as Output Growth to Hit 13-Year Low
Nov 23, 2015 8:01 AM
By Rapaport News
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RAPAPORT... Silver supply
will dive 3 percent this year as production is predicted to grow at its slowest
pace in 13 years following weaker demand from the jewelry and electronics
industries and China, according to a forecast from Thomson Reuters. Bullion coin
sales jumped to a new record.
Total supply is expected to slide to
1,014.4 million
ounces (Moz), Erica Rannestad, senior analyst in the GFMS team at Thomson
Reuters, said at an event hosted by the Silver Institute. Output is projected to record
its narrowest advance since 2002, up 0.3 percent to 867.2 Moz.
Jewelry fabrication is expected to fall
2.5 percent from a year earlier as the industry in China plummeted 25 percent. A
weaker economy in China, which accounts for 28 percent of silver demand in
global electronics fabrication, has added to the slowdown in demand from the
electronics sector that has been in decline since 2011.
Other
factors that will contribute to a fall in the supply of silver include a 5
percent drop in scrap return and net de-hedging of 12.6 million ounces, the Reuters
analyst said in the report, which said the precious metal’s price will average
$15.51 per ounce for the full calendar year.
Silver’s physical demand will contract
2.5 percent even as bullion coin sales hit its highest level in the third
quarter and demand from the photovoltaics industry is seen rising in 2015,
Rannestad said at the annual silver industry dinner November 17. Prices through
November 17 averaged $15.91/oz, an 18.3 percent plunge from a year ago.
“The silver market is expected to be in
an annual physical deficit in 2015, marking the third consecutive year the
market has realized an annual physical shortfall,” Rannestad said. “While such
deficits do not necessarily influence prices in the near term, multiple years
of annual deficits can begin to apply upward pressure to prices in subsequent
periods.”
Silver-coin
demand is expected to jump 21 percent in 2015. This comes after bullion coin
sales rose 95 percent to 32.9 million ounces during the third quarter, driven
by a slide in prices in July and August to six-year lows, especially in North
America, where coin sales more than doubled. The steep increase in purchases
led to a shortage of current-year silver bullion coins among major sovereign
mints.
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Tags:
data, jewelry fabrication, precious metals, Rapaport News, silver, The Silver Institute, Thomson Reuters
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