Silver jewellery sees India-led recovery
This year is expected to be a better one, feels the silver trade on the global trend.
The World Silver Survey 2017, issued by the US-based Silver Institute, said 2016 saw a nine per cent fall in demand for silver coin and medals fabrication, from a record high in 2015, to 123.2 million ounces (Moz). Total physical demand fell by 11 per cent to 1,027.8 Moz, with weaker offtake for jewellery, silverware and retail (by individuals) investment.
Silver jewellery fabrication declined nine per cent to 207 Moz from the record of 228.3 Moz in 2015. The fall was led by China and India, where jewellery offtake was weaker due to higher prices and a build-up of stocks.
Monal Thakkar, director, Amrapali Group, said: “2016 wasn’t a good year for India. Silver import halved. However, 2017 has given a very good pull. Import this year might again be higher.” Alexander Cameron, manager at GFMS Thomson Reuters for precious metals demand in Asia, told this newspaper: “Jewellery fabrication demand is expected to go by four per cent, with a recovery in India fuelling the rise.”
The average price rose 9.3 per cent in 2016 to $17.14 an oz, its first rise since 2011, following another annual silver market deficit, largest in three years and the third largest on record, reaching 147.5 Moz. In 2007, the price averaged $13.38 an oz.
For 2017, says GFMS, “We are expecting the 2016 drivers like buying of futures, options and exchange traded products (ETPs) in response to safe haven activity and strengthening supply and demand fundamentals once again to be at the fore in propelling the price to a threeyear high of $18.7/oz.”
The caveat is that “the price will be highly dependent on sentiment–driven factors such as a strong dollar, which might be offset by geopolitical concerns”. Last year, investment through ETP holdings fell seven per cent. Silver bar investment demand fell 46 per cent, mainly the result of lacklustre demand in India due to a combination of higher prices, destocking and government measures on unaccounted wealth, says the survey.
Global silver mine production in 2016 had its first decline since 2002, largely the result of lower byproduct output from the lead/zinc and gold sectors, it said. Scrap supply recorded its lowest level since 1996 and producer hedging also contracted, bringing down total supply by 32.6 Moz. But, on the demand side, new highs were recorded for silver’s use in the photovoltaic (for producing solar energy) and ethylene oxide sectors, both growing, and significant industrial applications. Silver scrap supply fell to 139.7 Moz, a level not seen since 1996, despite higher prices.
The survey says, “We expect industrial demand (55 per cent of the total) to remain hindered by underwhelming economic expansion in 2017, with modest contractions expected in most key demand segments. Lower solar demand will make up the lion’s share of the drop in industrial fabrication this year, as the market retreats from the record high of last year.”