The London Bullion Market Association (LBMA) ended FY 2023-24 on a strong note, with silver at US$ 24.45/toz, which was 2.3% higher as compared to March 31, 2023. In CY 2023, production at the world’s silver mines was slightly lower than the previous year, totalling 830.5 Moz and marking a 1% decrease. This dip was largely due to the temporary shutdown of Newmont’s Peñasquito mine in Mexico for four months following a labour strike. Mexico’s silver output fell by 5% to 202.2 Moz. Other contributing factors included lower-quality ore and closure of certain mines, leading to drops in production in Argentina (a decrease of 4.9 Moz), Australia (down by 3.1 Moz), and Russia (a decline of 1.4 Moz). However, there was a silver lining, with increased production from Chile (up by 10.1 Moz) and Bolivia (rising by 3.8 Moz) helping to offset some of these losses.
The overall demand for silver fell by 7% to 1,195 Moz in CY 2023, after a record-breaking year in CY 2022. The jewellery, silverware, and price-sensitive physical investment industries were mostly responsible for this decline. On the other hand, industrial demand surged to a new high in CY 2023, driven mostly by the electrical and electronics industry, which expanded by 20% to 445.1 Moz. This increase was the result of silver’s expanding and vital usage in photovoltaics, which reached a new high of 193.5 Moz, increasing by a staggering 64% over the CY 2022 total of 118.1 Moz.
In India, silver is mainly used for jewellery purposes, and the bulk of the demand comes during festivals like Diwali and Akshay Tritiya. India’s silver consumption in the industrial sector is relatively low as compared to global levels. However, the demand from the industrial sector is expected to increase significantly due to new-age technological developments, like EVs and 5G, in the coming days. As per Metal Focus, in CY 2023, Indian silver demand was around 6,800 tonnes, and is expected to grow to around 7,400 tonnes in CY 2024.
Hindustan Zinc is now ranked the 3rd largest silver producer in the world. The Company sold 746 MT in FY 2023-24, which was 4% higher as compared to FY 2022-23. This was notably the highest-ever silver sales achieved by the Company. With increasing demand for silver in the near future, Hindustan Zinc is planning to expand its presence in this segment.
The amount of silver in circulation is estimated to decline by 1% overall. In line with this trend, in CY 2024, the market is expected to witness yet another significant silver deficit, with a forecast of 215.3 Moz, marking the second-largest market shortfall in over two decades.
Silver’s demand potential stems from a variety of factors. In addition to its growing involvement in the energy transition and its numerous conventional applications, it is projected to become a necessary element of the artificial intelligence (AI) revolution. The need for silver in AI will be driven by end-use industries like transportation, nanotechnology, biotechnology, healthcare, consumer wearables, computing, and energy in data centres.
