Silver - Global Demand & Supply - An Overview

 The global silver market is currently defined by a significant structural shift. For the past few years, the world has been in a physical silver deficit, meaning the total demand for silver is outstripping the total supply.

Here is a comprehensive breakdown of the production and consumption of silver worldwide, based on data from the Silver Institute and World Silver Survey.

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1. Global Silver Supply (Production)

Total global silver supply hovers around 1 billion ounces (Moz) annually.

A. Mine Production (approx. 820–830 Moz)

Surprisingly, most silver is not mined directly. Only about 28% of silver comes from "primary" silver mines. The remaining 72% is a by-product of mining other metals:

• Lead/Zinc mines: 30%

• Copper mines: 25%

• Gold mines: 16%

Top Silver Producing Countries (2023/2024):

1. Mexico: The world’s largest producer (home to Fresnillo, the world’s largest silver miner).

2. China: A major producer and the world's largest consumer.

3. Peru: Historically #2, though production has fluctuated due to social unrest.

4. Chile: Primarily as a by-product of its massive copper industry.

5. Poland: Home to KGHM, one of the largest single silver-producing companies.

B. Recycling (approx. 180 Moz)

Recycled silver (mostly from industrial scrap and melted jewelry) accounts for nearly 20% of the total annual supply.

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2. Global Silver Consumption (Demand)

Demand for silver reached record highs recently, driven by its dual role as an industrial metal and a precious metal.

A. Industrial Applications (The "Green" Driver)

Industrial demand accounts for over 50% of total consumption and is the fastest-growing sector.

• Photovoltaics (Solar Panels): This is the most critical growth area. Silver is the best conductor of electricity; it is used in the paste on solar cells. In 2023, solar demand jumped by 64% as the world accelerated the energy transition.

• Electronics: Used in switches, multilayer ceramic capacitors (MLCCs), and 5G infrastructure.

• Electric Vehicles (EVs): An EV uses nearly double the amount of silver used in an internal combustion engine (ICE) car for battery management systems and sensors.

B. Jewelry and Silverware

• Jewelry: Accounts for roughly 15-20% of demand.

• India is the dominant force here. Indian demand is highly "price-elastic"—when prices drop, Indian imports of silver skyrocket.

• Silverware: A smaller segment (approx. 5%), dominated by India and Turkey.

C. Investment (Physical Bars and Coins)

Physical investment accounts for about 20-25% of demand. Investors buy silver as a hedge against inflation and currency devaluation. The US, Germany, and India are the largest markets for silver bars and coins.

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3. Key Market Trends

The Structural Deficit

The silver market has been in a deficit for four consecutive years (2021–2024).

• In 2023, the deficit was approximately 184 million ounces.

• Supply is relatively "inelastic" (it’s hard to increase silver production quickly because most of it depends on copper and zinc mining).

• Demand is increasing due to the "Green Revolution."

The Role of China

China is the "X-factor" in silver. They are the largest industrial consumer, the second-largest miner, and they have recently begun importing massive amounts of silver to support their dominance in solar panel manufacturing.

Inventories are Dropping

To make up for the deficit between production and consumption, the world is drawing down on visible stocks held in vaults like the London Bullion Market Association (LBMA) and the COMEX in New York.

Summary Table (Approximate Annual Figures)

Category	Amount (Million Ounces)
Total Supply	~1,000 Moz
— Mine Production	~825 Moz
— Recycling	~175 Moz
Total Demand	~1,200 Moz
— Industrial (Solar/Electronics)	~650 Moz
— Jewelry/Silverware	~250 Moz
— Physical Investment	~250 Moz
Market Balance	Deficit (~200 Moz)

Conclusion

The silver market is currently characterized by stagnant mining production and surging industrial demand (specifically solar). This has led to a persistent supply-demand gap, making silver one of the most talked-about commodities in the transition to renewable energy.