Silver market remains significantly undersupplied due to rising demand – Commerzbank

The Silver Institute, in cooperation with the precious metals research firm Metals Focus, published updated forecasts for the Silver market this week, Commerzbank’s commodity analyst Carsten Fritsch notes.

Silver loses almost 15% from its 12-year high in October

“According to the report, Silver demand should increase by 1% to 1.21 billion ounces, reaching the second-highest level since records began. However, in the spring, the Silver Institute and Metals Focus were still expecting somewhat stronger demand. Industrial demand is expected to increase by 7% to a record level, driven by electrical and electronic applications. Increases are also expected for jewellery and Silverware.”

“In contrast, physical investment demand is expected to fall by 15% to a four-year low. Silver supply is expected to increase by 2% to 1.03 billion ounces. The Silver Institute and Metals Focus had previously expected a decline here. Both rising mine production and a stronger supply of Silver scrap are contributing to the higher supply. The latter is expected to reach a 12-year high, reflecting the higher price level. This year, the Silver market is expected to show a supply deficit for the fourth year in a row, which at 182 million ounces is likely to be considerable again.”

“In spring, however, the Silver Institute and Metals Focus had expected an even larger deficit. If the ETF inflows of 100 million ounces assumed by the Silver Institute are included, the deficit is even larger. Nevertheless, Silver came under pressure this week and yesterday temporarily slid below the 30 USD per troy ounce mark for the first time in almost two months. Silver has lost almost 15% from its 12-year high in October. The most important reason is the simultaneous correction in the Gold price, which Silver was unable to escape.”