2016 Silver Market Trends

The Silver Institute has just released their Market Trends report for 2016 and we summarise as follows:

Demand:

Industrial – accounted for 54% of demand in 2015 and is set to increase again in 2016.

Photovoltaics (PV) – set to surpass the 2011 record of 75.8m oz in 2016 and account for 13% of silver demand.

Ethylene Oxide (EO) – this is the big growth area.  Set to increase 25% (10m oz) this year over 2015 which itself saw 40% growth.

Jewellery – set to increase 5% in 2016 after a slight decline in 2015.

Coins – already off at a cracking pace it is expected to remain similar to the record year last year of 130m oz, which accounted for 12% of physical demand.

ETFs – holdings for physical metal backing paper fell 2.8% in 2015.  They don’t really make a call as it will be market dependent…

India – gets a special mention as they imported a whopping 228m oz of silver last year and are expected to continue this pace in 2016.

Supply:

Mine supply – expected to drop 5% in 2016 and continue to drop to 2019.  2016 will be the first year of reduced supply since 2002.  [this is in line with various articles we’ve written about 2015 being the year of peak gold and silver].

Scrap – further weakening as has been the case for several years.

Deficit:

“The silver market deficit (total supply less total demand) is expected to widen in 2016, drawing down on above-ground stocks. The larger deficit is expected to be driven by a contraction in supply.”