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The Silver Market Review - Reuters

  • SI Interim Nov14 press release.indd



    • The silver market is expected to be in an annual physical deficit of 52.2 Moz in 2016, marking the fourth consecutive year in which the market has realized an annual physical shortfall. While such deficits do not necessarily influence prices in the near term, multiple years of annual deficits can begin to apply upward pressure to prices in subsequent periods. This year, an expected 71.4 Moz net inflow into ETP holdings and a 61.9 Moz derivatives exchange inventory build on a year-to-date basis (end-October) have increased the impact of the physical deficit, bringing the net balance to -185.5 Moz, equivalent to approximately nine weeks of global demand. Above ground stocks, including ETP’s and exchange inventories, are estimated to reach 2,640.1 Moz in 2016; a 15% increase from the previous year.

    • Silver prices this year through 11th November averaged $17.23/oz, which was 9.9% higher than in the same period in 2015. The GFMS team at Thomson Reuters forecasts silver prices to average $17.15/oz for the full calendar year, a 9.4% increase over the 2015 average.

    • Total silver supply is forecast to fall 3% to 1,012.4 Moz in 2016. The decline is expected to be driven by a 1% drop in mine production, a 0.3% fall in scrap supply and net de-hedging of 20.0 Moz. Mine production is forecast to reach 887.4 Moz this year, which is almost 6 Moz lower than 2015 and the second highest year of production on record. Healthy increases in primary silver mine production, particularly in Peru, are being partially offset by losses in silver output from lead/zinc and gold mines. Following four years of consecutive declines, scrap supply is contracting only marginally, 0.5 Moz compared to 2015, which is a marked change from the 29 Moz annual average decline recorded over the previous four years. Higher local silver prices have been contributing to the improved sentiment.