Silver is off to a good start in 2023 with the year-to-date silver price average for 2023 (through to 7th February) being 8% higher than the full year price average for 2022, according to an analysis by the Silver Institute with added inputs by Metals Focus, a precious metals research consultancy based in London.
Silver is also expected to achieve a new high in industrial applications, the most important category in the demand complex. However, economic and geopolitical factors, including persistent tight US monetary policy and the Russian-Ukraine war, could pose challenges for the entire precious metals complex, including silver.
Having hit record highs in 2021 and 2022, silver industrial offtake is expected strengthen further by 2.6% y/y to 550 million ounces (Moz) in 2023. Silver industrial demand should be lifted from further gains in vehicle electrification, and governments’ expanding commitment to green infrastructure. Additionally, the end of zero Covid in China supports sentiment towards industrial metals, which extends to silver.
Photovoltaic silver offtake is set to achieve a new peak this year. Also, silver demand in the automotive sector should benefit from rising vehicle output, the easing of the chip shortage and the growing use of electronic components and powertrain electrification.
By contrast, jewellery demand is forecast to decline by 10% this year, driven by the Indian market, while the rest of the world should see a modest rise. After hitting a record high in 2022, Indian jewellery demand this year is expected to ease back to more normal levels. In the US, a modest dip in consumption may occur this year due to economic concerns and normalised spending on travel. Following a surge in 2022, silverware fabrication is expected to fall by more than 20% this year. In line with the jewellery sector, India will account for the bulk of losses in this segment, the report said.
Global silver demand is forecast to dip 7% to 1.15 billion ounces (Boz) in 2023, from 1.24 Boz last year. Silver physical investment is projected to drop by 16 percent y/y from 2022s record-high of 352 Moz. Silver supply is expected to rise by 4% in 2023 to a new high of 1.055 billion ounces, which will be a new high, fuelled by higher mine output.
Silver mine production is expected to rise by 5% in 2023 to 873 Moz, the highest level since 2016. The increase in silver recycling will be more modest, with volumes likely to rise by 3% to a decade high.
The Silver Institute has forecast silver to average Dollar 23.00 an ounce for the full year, which would be some 6% higher y/y.