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 produced 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.
| 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 |
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.
| 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
To document these and other market fundamentals, each year the Silver Institute works with GFMS Limited, of London, a leading research company, to prepare and publish an annual report of worldwide silver supply and demand trends, with special emphasis on key markets and regions. This annual survey also includes current information on prices and leasing rates, mine production, investment and fabrication.
To learn more about the general production and uses of silver, please see our Production and Uses pages. For articles related to supply and demand, see the Silver Newsarchives.
| 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 | ||||||||||
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