The Washington-based Silver Institute is forecasting demand for silver this year to set a record of 1.112 billion ounces, which is after turning in an estimated 1.029Boz in 2021 — itself a new record.
And that boost in offtake this year is expected to be spread across most key demand components: industrial, bullion, jewellery and silverware.
Last year was also the first time since 2015 that global demand hit 1Boz.
Of course, as history amply demonstrates, demand levels are no guarantee that prices for the metal will take off.
As we saw in 2021, the long-promised silver price rally ran out of steam during the year, and as of today the metal is down 14.15% year on year, while the gold-silver ratio remains high at 1:79.
Silver price ‘challenging’ for second half
Indeed, the Silver Institute warns that the price outlook in the second half of 2022 “becomes more challenging”.
For the first half, though, the institute believes that macroeconomic and geopolitical conditions will generally support precious metal prices.
The outlook for 2022 assumes a 5% increase in silver demand for industrial fabrication, as the metal’s use expands in both traditional and critical green industries.
“Ongoing improvements in the global economy will give silver industrial applications an additional boost, mitigating near-term headwinds from supply chain bottlenecks and the challenges in certain regions from the ongoing COVID pandemic,” Silver Institute predicts.
The outlook for silver demand in automotive and 5G-related applications is also forecast to remain robust.
“Moreover, as chip manufacturing bottlenecks are forecast to ease gradually in 2022, the rise in silver demand for these and other electrical and electronic applications is expected to expand.”
Silver bullion buying to grow, Indian demand expected to bounce back
Physical demand (silver bar and coins) is projected to jump 13% this year – achieving a seven-year high.
Elevated inflation pressures will grow in 2022, which should encourage retail investors to seek physical silver for wealth preservation.
“Accordingly, profit-taking is likely to remain subdued,” the institute says.
Silver’s use in jewellery and silverware is expected to jump by 11% and 21% respectively.
In terms of jewellery, the Omicron wave has affected silver jewellery sales in India, but an expected easing of pandemic restrictions, plus efforts by jewellery retailers to increasingly push silver to urban consumers, will favour jewellery sales across the sub-continent.
“India will account for the bulk of the increase for silverware in line with jewellery,” reports the Silver Institute.