Demand and Supply in 2008

Demand

Total global silver fabrication slipped a modest 0.9percent in 2008 to 832.6 Moz. Even though industrial demand dipped slightly by 1.4 percent to 447.2 Moz, the 2008 performance was the second only to 2007, with most of the loss occurring in the 4th quarter of 2008. Jewelry fabrication dropped by 3.2 percent to 158.3 Moz in 2008, the product of weaker off-take in Italy and Thailand. Growth in this sector was most pronounced in India, China and Russia. Silverware demand fell by 2 percent in 2008 to 57.3 Moz, as losses in western markets were partially offset by gains in India, which witnessed a 7 percent rise, as well as Russia, which also enjoyed growth in consumption last year.

World Silver Demand

Supply

Global silver mine production grew by 2.5 percent in 2008, driven by strength in the gold and lead/zinc by-product sectors to 680.9 Moz, representing the sixth year of consecutive growth and 77 percent of total supply last year (see the Summary Table on page 1). Of note, Bolivia’s output more than doubled over 2007’s performance, and Russia experienced a 24 percent gain in mine supply last year. Peru was again the world’s biggest silver mining country in 2008, followed in the rankings by Mexico, China, Australia, and Chile. Last year, silver generated at primary mines posted a 1 percent decline to account for 28 percent of total mine production. Cash costs at primary silver mines rose to US$4.53 per ounce in 2008, due to inflationary input cost pressures and diminishing base metal by-product credits.

The net supply of silver from aboveground stocks dropped by a robust 14 percent in 2008 to 151.7 Moz. The decline was mainly due to lower net government sales and a drop in scrap supply. Scrap volumes fell to an 11 year low of 176.6 Moz. De-hedging reduced the overall producer hedge position by 5.6 Moz last year.

World Silver Supply and Demand

To document these and other market fundamentals, each year the Silver Institute works with GFMS Limited, of London, a leading research company, to prepare and publish an annual report of worldwide silver supply and demand trends, with special emphasis on key markets and regions. This annual survey also includes current information on prices and leasing rates, mine production, investment and fabrication.

To learn more about the general production and uses of silver, please see our Production and Uses pages. For articles related to supply and demand, see the Silver News archives.