Data compiled by a leading New York-based research agency, The Silver Institute, showed total physical demand for silver at a record 1,081 million ounces (Moz) or 30,649 tonnes in 2013, as compared to 954.4 Moz or 27,057 tonnes the previous year. “The largest component of physical silver demand, industrial applications, dipped by less than one per cent, to 586.6 Moz, to account for 54 per cent of total demand. Asia,however, experienced a three per cent increase in silver industrial demand, led by China, where a continued recovery in the electrical and electronics sector, along with gains in the ethylene oxide industry, took total Asian industrial offtake to a new high. Japan also experienced gains in silver industrial demand,” The Silver Institute said, in its latest annual report.
In India, overall sentiment remained favourable for silver, at the expense of gold. The latter faced reduced supply through official channels, on several restricting measures adopted by the government. An example is the 80:20 rule, under which at least 20 per cent of every imported gold lot had to be supplied to jewellery exporters. Consequently, India’s silver import surged 180 per cent in 2013 to around 5,500 tonnes, the highest ever. Earlier, India had surpassed the 5,000-tonne mark for import only in 2008, when the jewellery industry was at a peak.
“Consumers are planning in advance for future use of silverware and ornaments, due to low prices. Since the silver price has been lower for long, consumers are booking in huge quantities, raising overall demand,” said Rahul Mehta, managing director, Silver Emporium, a city-based leading manufacturer of silver artifacts.
Last year’s recovery in jewellery fabrication was a reflection of the improved economic outlook in the industrialised world, which lifted consumer confidence and retail sales for a 10 per cent increase in jewellery demand. Global silverware fabrication rose 12 per cent to a three-year high, due to strong gains in India and China, while photography demand slipped seven per cent in 2013, posting the slowest percentage decline in nine years. On the supply side, silver scrap fell 24 per cent, the largest drop on record. Silver mine production grew by 3.4 per cent to reach 819 Moz.
Scrap supply to the market in 2013 experienced the largest year-on-year reduction since the 1980s, due to a combination of softer silver prices and an exhaustion of “distressed” coin and jewellery recycling. The price of silver averaged $23.79 an oz in 2013, the third highest nominal average price on record, in a particularly volatile year for the entire precious metals complex.