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Silver Market Reversing To Small Surplus In 2017


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Sr Site Supporter
Mar 25, 2010
GFMS: Silver Market Reversing To Small Surplus In 2017

Allen Sykora
Thursday November 16, 2017 09:37

Kitco News

(Kitco News) - The global silver market will be in a small supply surplus in 2017 after previously posting a deficit for four years in a row, according to the GFMS/Silver Institute interim market review released Wednesday night.

The 2017 surplus was pegged at 32.2 million ounces. In recent years, a supply deficit had narrowed from 136.4 ounces in 2013 to 18.9 million as of 2016.

Johann Wiebe, lead analyst for the GFMS team at Thomson Reuters, presented the report at the annual silver industry dinner hosted in New York City by the Silver Institute. Data for the report is compiled by GFMS.

The silver price averaged $17.13 an ounce for the year through Nov. 10, compared to $17.23 for the same period last year, the consultancy said. For the full year, GFMS predicted an average of $17.13, only a penny less than $17.14 in 2016.

Total silver supply is forecast to be roughly flat in 2017 at 1 billion ounces, as slightly higher scrap supply and a drop in net de-hedging are expected to offset lower mine production, the report said. Global mine output is on pace to reach 869.7 million ounces this year, which would be a year-on-year drop of 2%. This reflects lower production in the first half of the year, with steep declines in Chile and Australia, GFMS said. Still, 2017 global production is forecast to be just 3% below the 2015 record.

After five consecutive years of declines, global scrap supply is forecast to rise 1% this year to 141.6 million ounces, driven largely by higher Asia flows. GFMS attributed this to improved industrial-fabrication demand that generated higher volumes of fabrication waste.

Meanwhile, total physical demand is forecast to drop by 5% in 2017 to 976.1 million ounces, led by a sharp fall in retail investment, although an upturn in silverware demand and a modest recovery in jewelry and industrial fabrication should help to offset some of that decline, the report said.

Industrial fabrication is forecast to rise by 3% this year to 581.4 million ounces, the report said. This follows a modest year-on-year decline in 2016. The improvement this year is the result of gains in demand for silver from the solar industry and modest increases for electronics and brazing alloys and solders, GFMS said.

The demand from the solar industry is forecast to increase by 20% in 2017 to nearly 92 million ounces. Worldwide solar cell production increased to 96,460 megawatts, driven largely by a strong rise in solar cell production in China, up by 27% year-on-year to 71,400 MW, following a 37% year-on-year increase the previous year. Solar-panel installations in China jumped by more than 50% from 2016, boosted by subsidy policies implemented by regional governments, GFMS said.

Demand for silver coins and bars is forecast to drop by a 37% year-on-year to 130.1 million ounces, generally hurt by an appetite for riskier assets as stock markets rose, the report said.

However, jewelry fabrication is expected to recover 1% to 207.1 million ounces. Asian demand has eased, largely due to lower offtake in China, although this has been partly offset by stronger demand in India, the report said. Meanwhile, North American jewelry demand is expected to rebound this year on improving economic sentiment.

Silverware fabrication is seen rising by 10% year-on-year to 57.5 million ounces, the report said. The increase is led by a strong uptick in Indian fabrication demand, which should hit a two-year
high of 38.2 million ounces, helped by a good monsoon in the previous year, GFMS said.

Net inflows into exchange-traded products are expected to reach 14.9 million ounces this year, and there also is likely to be an 18.5 million-ounce drop in the global exchange inventory build on a year-to-date basis, the report said. This should take the net balance to 35.8 million ounces, according to data compiled by GFMS.

By Allen Sykora
For Kitco News



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Site Supporter
Mother Lode
Mar 31, 2010
That means theres really a shortage, cant believe these guys.