The Silver Institute industry association has projected a 17% increase in the global silver deficit to reach 215.3 million troy ounces in 2024, driven by a 2% growth in demand primarily fueled by robust industrial consumption, alongside a 1% decline in total supply. Silver, utilized in various sectors such as jewelry, electronics, electric vehicles, solar panels, and investment, is poised to encounter the fourth consecutive year of a structural market deficit.
According to Philip Newman, managing director at consultancy Metals Focus, the deficit in the silver market is expected to provide substantial support and establish a strong price foundation. Despite a 30% reduction in the deficit last year, the absolute deficit of 184.3 million ounces was still significant. Global supply has remained relatively stable at approximately 1 billion ounces, while industrial demand exhibited remarkable growth at 11%.
Notably, visible silver inventories, along with substantial metal stocks held by individuals and investors, currently act as a safeguard against a market squeeze. However, the report highlights that some of these silver reserves may be tightly held, warranting observation of the potential impact of ongoing deficits on the market.
The report also notes a 5% decrease in stocks held in commodity exchange depositories and London vaults in the previous year, amounting to nearly 15 months of global supply by the end of 2023. The majority of this reduction in reported stocks occurred in China, where a rapid increase in local industrial demand (44%) has altered the local supply/demand and inventory dynamics.
Amid a rally in gold and strong copper prices, spot silver prices have surged by 18% year-to-date, reaching $29.79 per ounce, marking a level not seen in over three years.