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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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