Silver Mine Output Records First Decline in 14 years

SEATTLE (Scrap Monster): The ‘World Silver Survey 2017’ report published by The Silver Institute provides detailed analysis of global silver supply and demand. The report produced by GFMS Thomson Reuters on behalf of the Institute indicates that global silver supply declined for the first time in fourteen years. The production contracted slightly for the first time since 2002, the report noted.

The worldwide silver mine production registered relatively modest decline of 0.6% in 2016. The production during the year totaled 885.5 Moz. The decline in output was mainly due to drop in production in lead, zinc and gold sectors. Among major producing countries, Mexico registered sharpest decline in production, followed by Australia and Argentina. The decline in production in these countries was partially offset by higher output from Peru. The global scrap supply of silver fell marginally by 1% to 139.7 Moz, despite rise in silver prices. This was the lowest volume recorded since 1996.

According to the report, Mexico, Peru and China were the top three silver producing countries in 2016. The top silver producing companies were Fresnillo, Glencore and KGHM Polska Miedź S.A. Group. Among regions, Europe, North America and Oceania reported decline in production. On the other hand, Central & South America and Asia reported increased production. Mine production in North America declined by nearly 2% to 234.6 Moz, accounting for just over a quarter of total world production. The production growth rate in Central & South America slowed down in 2016. Asia reported 5% jump in output to 7.7 Moz, when matched with the previous year. Production in Oceania region has plunged by 9% to 46.9 Moz in 2016, thereby hitting the lowest level in past nineteen years. European silver production totaled 113.2 Moz, declining sharply by 6% year-on-year.

The total physical demand fell sharply by 11% to 1,027.8 Moz. Retail investments took a hit. The demand from industrial fabricators has dropped by nearly 1% to 561.9 Moz. Photographic fabrication demand was down 3% in 2016. The demand totaled 45.2 Moz. The largest demand decline was witnessed in coin and bar investment, which reported 29% year-on-year decline to 206.8 Moz, mainly on account of slowdown in Indian purchases. Silverware fabrication demand fell sharply by 17% to 52.1 Moz. Silver jewelry fabrication demand too retreated from the previous year record levels, falling by 9% to 207 Moz. On the other hand, photovoltaic demand for silver surged higher significantly by 34% in 2016.

Also, investor holdings in silver ETPs have increased by 47.0 Moz to 664.8 Moz by end-2016. In value terms, the total holdings surged higher by 26% to $10.8 billion. The net holdings in iShares Silver Trust-the largest silver ETP increased by 7% to 341.3 Moz, thereby accounting for 51% of the total silver ETP holdings.

The LBMA silver price averaged $17.14 per oz during the year, higher by 9.3% when compared with 2015 average prices. The white metal prices witnessed roller coaster ride during the year, increasing sharply by 40% during the initial three quarters but falling by more than 16% in the final quarter. The prices managed to gain 17.5% during the full year 2016. The price volatility of silver edged higher from 24% in 2015 to 28% in 2016.