Key segments of the silver market to see 42% growth through 2033 - Oxford Economics
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In a research report conducted on behalf of the Silver Institute, the analysts said that three key pillars of global silver demand – industrial, jewelry and silverware – are expected to see total demand growth of 42% through 2033, "effectively double the growth rate over the previous decade, 2014-2023."
The report said that industrial demand will continue to dominate the silver market over the next 10 years with demand from the sector expected to grow by 46%. At the same time, jewelry and silverware demand are forecasted to rise by 34% and 30% respectively.
The report notes that these three segments of the silver market account for nearly three-quarters of global demand. Industrial applications alone represent more than 60% of total silver demand.
"Over the next decade, we forecast the global output of the electronics and electrical applications industry will grow by 55%," the analysts said in the report. "This is an annual average growth rate of 4.5%. The pace of growth is expected to be faster in the first five years (2023-28) compared to the second (2028-33), at an average of 5.4% versus 3.5% a year."
One interesting observation from the report is how China is expected to play a dominant role in the silver market during the next 10 years. Oxford Economics sees China leading industrial and jewelry demand over the coming decade.
"Of the forecast growth in the output of sectors that use silver for industrial purposes over the next decade, 51% is predicted to occur in China. The United States is forecast to have a 5% share in the additional output," the analysts said in the report.
Looking at jewelry demand, Oxford Economics sees rapid growth in the next five years, with China leading the world.
"Just over half of the growth in the global output of the other manufacturing sector between 2023 and 2033 is forecast to occur in China," the analysts said. "The United States is forecast to have an 8% share of the additional other manufacturing output. This suggests there will be some move in production from India to China over the next decade."
Looking at silverware manufacturing, Oxford Economics expects Asia excluding China will drive demand in the market, while India, which has dominated this segment of the silver market, will fall to second place.
"Our forecasts suggest that most of the growth in the future demand for the metal by silverware fabricators between 2023 and 2033 is likely to come from Asian countries. We expect demand from India will contribute 43% of the growth in the demand for silver to be turned into silverware. This is less than their existing share of consumption at 73%," the analysts said.
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Solid demand growth for silver comes as the market is expected to see significant supply deficits in the next several years. According to the Silver Institute, the precious metal is expected to have a supply deficit of 142.1 million ounces in 2023; this follows the 2022 deficit of 237.7 million ounces.
So far, solid physical demand for silver has not done much to attract investor attention as investment demand remains fairly lackluster with prices unable to hold above $23 an ounce. Silver also continues to underperform gold as the gold/silver ratio remains relatively elevated above 85 points.
According to many analysts, silver has struggled to attract attention as it fights headwinds on two fronts. The Federal Reserve’s aggressive monetary policy continues to support the U.S. dollar and higher yields, while recession fears are weighing on potential industrial demand.
However, many analysts have said that the green energy transition driving solar demand reduces the potential impact a recession would have on silver.