Silver fabrication demand dipped 0.9 per cent in 2006 to 840.5 million ounces, according to Washington-based The Silver Institute. Silver fabrication demand includes minting coins, jewelry, and industrial demand.
At the same time, industrial applications posted a gain of 6 per cent to 430 million ounces, recording the fifth consecutive year of growth in this category, the recently released report said.
Total industrial demand exceeded 50 per cent of the global fabrication demand for the first time in 2006. China posted strong industrial demand growth at 10.4 per cent, and Japan recorded an equally impressive 10 per cent increase in 2006.
In the U.S. last year, the total industrial silver use posted a record 6 per cent increase to 106.8 million ounces. The report further said that jewelry fabrication posted a nearly 5 per cent loss in 2006, due largely to price-related losses in India, while Indonesian and Chinese jewellery fabrication grew by 18 and 16 per cent respectively.
Lower fabrication in price sensitive countries and structural taste shifts accounted for the 7.5 million ounce dip in global silverware demand in 2006. Photographic demand decreased by 10 per cent in 2006 to 145.8 million ounces, mostly due to inroads by digital imaging.
Yet again, global silver mine production was up fractionally in 2006, with notable gains in Latin America and Asia. Total silver mine production reached 646.1 million ounces last year, with Peru, Mexico, China, Australia and Chile being the top five silver mining countries.
Silver produced at primary mines fell by 10 per cent to 161.4 million ounces. Total scrap supply provided the market with 188.0 million ounces of silver in 2006, unchanged from 2005.
According to the report the silver spot price buoyed by strong investor interest, the price of silver rose 58 per cent in 2006 to an average of $11.55 an ounce – compared to $7.31 in 2005 – even hitting a high of $15 in May.
This recent upward trend was driven by a new Silver Exchange Traded Fund (ETF), and new information about the reality of a silver shortage. Yet, another reason for high silver price was the lack of supply which contracted by 1.5 per cent.
London-based GFMS Limited, the metals research company, independently researched and produced the World Silver Survey 2007 for The Silver Institute. About 23 companies involved in the silver industry sponsored the survey, which The Silver Institute has been publishing since 1990.
“Following a sizable increase in 2005, mine production was little changed in 2006, while scrap only rose at the margin, the latter very much due to ongoing reductions in the quantity of recycled photographic silver,” the report said.