2022 Silver Demand Projections
Silver demand is expected to grow in 2022, with global silver industrial fabrication reaching a record high. The use of silver has expanded across many different technologies and industries over time; this trend will continue into next year as well - especially thanks to its rising popularity among green-tech companies who are looking for alternatives when it comes to environmental protection or energy production (such solar panels). Physical silver investments may also see an increase at around 7%.
The global precious metals market is forecast to achieve a new record high this year, with silver demand gaining in all key sectors. In 2022 the price outlook becomes more challenging as U.S.-led economic policy rates hike and may offset some of the last years' gains from an improving geopolitical environment that supported greater investment interest across the Asia Pacific.
In 2022 the silver market will build on the strong foundation set last year when silver demand gained in all key sectors. Continuing the trend from 2021, this year's upside will be broad-based, with gains expected from most key demand components. The global total for 2022 is forecast to achieve a new record high, increasing by 8%to 1.112 Boz.
With the global economy continuing to improve, silver industrial applications are set for an additional boost from supply chain bottlenecks and COVID pandemic challenges. This should mitigate near-term headwinds in certain regions caused by these factors while record PV installations drive demand upwards even with ongoing efforts at reducing loadings of this metal into products like solar panels which have seen increased recycling rates thanks largely due to government commitments towards carbon neutrality via renewable energy projects
There are reports of a worldwide chip shortage that could last up until 2022. The silver demand for automotive and 5G related applications has been strong this year, both due to increased vehicle electrification as well as an acceleration in building the infrastructure necessary around these networks which will require more precious metals like lead or copper needed for wiring installation kit purposes - all while mobile device sales continue growing at breakneck speeds.
The demand for jewellery is set to strengthen this year as Indian consumers continue their buying. The country's economy will be fueled by improving sentiment and even though there was an Omnicron COVID-19 outbreak that briefly hurt sales, efforts are underway by retailers to push silver more towards investors. In the U.S., following a significant rebound in 2021, jewellery sales expansion is expected to continue, albeit at a slightly slower pace. Silver production is forecast to expand by 21% this year; again, India will account for the bulk of the increase in demand for silver jewellery (globally).
The total global silver supply is projected to rise by 7% to 1.092 Boz in 2022. The main contributor is silver mine production, which is forecast to grow 7% to a six-year high this year. This will be driven by higher output from primary silver mines, particularly from several large existing operations and supported by large new projects coming online. The increase in silver recycling should be more modest in 2022, with volumes likely to advance by 3%, with the rise entirely due to higher industrial recycling.
With silver expected to see its first market deficit in six years, projections point towards a shortage of 20 million ounces this year. However, the projected gap is not entirely considering the factors at play - demand fluctuations from both industrial uses as well as investment coins/bars which contribute significantly more than they did previously.
The global economy is still uncertain, which means that people will seek protection by investing in precious metals. Silver physical investment should enjoy double-digit gains this year to hit a seven-year high! As we advance into 2022 and inflationary pressures continue to build amongst other things due to an upcoming economic crisis or trade war between countries that rely heavily on imported materials for their production needs.
Silver exchange-traded products (ETPs) saw a 6% rise to 1.132 Boz last year. So far this year, silver ETP holdings are little changed on year-end 2021 and remain close to record highs, a position which should be maintained for much of this year.
Early 2022 has seen GDP growth downgraded for several major economies, along with rising financial market volatility. This points to an increased risk that the speed of the U.S. interest rate hiking cycle could turn out to be slower than current market expectations have allowed. As a result, silver prices should initially benefit from fresh investor interest in precious metals. Silver's high beta should also see it outperform gold, with the GSR projected to retreat below 70 by year’s end.