Silver fabrication demand declines 1.5% in 2011

Silver fabrication demand fell by 1.5 per cent in 2011 due to a fall in industrial applications, according to a recent finding by London-based Thomson Reuters GFMS.

Last year, silver’s use in industrial applications fell by 2.5 per cent to 486.5 million oz (Moz). Industrial fabrication in the first three quarters of 2011 was particularly strong; however, the euro zone crisis during the fourth quarter had a notable impact on industrial demand, resulting in the slight decline in the full-year total.

China posted a five per cent gain in industrial fabrication, led by robust household purchases, strong automobile demand and healthy infrastructure spending.

 

Jewellery demand slipped to 159.8 Moz, the product of volatile prices and a weak global economic backdrop.

Demand from photography fell by eight per cent, posting the slowest percentage decline in six years, with the medical field deferring migration to digital systems due to a lack of funding. Finally, silverware demand fell to 46 Moz, due to the sluggish global economy and ongoing structural losses.

The white precious metal posted an average price of $35.12 in 2011, more than double the $14.67 annual average price achieved in 2009. This offers further testament to investors’ enthusiasm for the metal, as silver World Investment (including implied net investment, silver bars, coins and medals) produced another historic high total last year of 282.2 Moz, the equivalent of approximately $10 billion on a net basis, itself a record high.

Physical silver bar investment grew by 67 per cent in 2011 to 95.7 Moz, while global coins and medals fabrication rose by almost 19 per cent to an all-time high of 118.2 Moz. Western Europe and the US, which performed the best in 2010 in terms of American Silver Eagle Bullion Coin sales, led this category to its record high. Elsewhere, strong demand in China accounted for a near 60 per cent rise in its bullion coin output last year. Global silver ETFs holdings proved to be quite resilient last year, with a relatively modest drop of four per cent to 576.1 Moz at the end of 2011.