Solar demand is boosting silver prices, says Silver Institute

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The Silver Institute and ETF Securities have provided updates on how silver demand in PV is currently on the rise and how silver prices are expected to grow this year.

The Washington-based Silver Institute reported a 9% price increase since the beginning of 2016, its first annual rise in five years. The PV industry, the association said, “helped” improve silver industrial offtake, due to its record performance last year.

“We expect that the factors which buoyed institutional silver investment over much of 2016, and have carried over into the early months of 2017, will remain relevant for the remainder of this year,” stated Michael DiRienzo, Executive Director of the Silver Institute.

The association also said that changing expectations for U.S. interest rates, and the proliferation of negative policy rates across other key reserve currencies has rekindled institutional investor interest in precious metals.

Meanwhile, UK-based asset management firm ETF Securities also reported that silver demand for solar panels is growing and record levels are expected in 2018.

The company, which cites data from CRU Consulting, said that global silver demand is expected to grow at annual average of 114 million ounces over the next five years, and that peak consumption of 148 million ounces will be reached in 2018.

ETF said the average silver price should range between $20 and $22 per ounce in 2017 and that this will be mainly attributable to a combination of higher inflation, a weakening US dollar and improving manufacturing growth.

“After reaching a decade high in December 2016, ETF Consulting stated, we expect COMEX silver inventory to fall 17% by the end of 2017 back to the levels seen at the beginning of 2016, as mining capital expenditure has continued to slide. Additionally, we factor an 18-month lag to this input, reflecting the time it takes investment to bite into supply. As mining capital expenditure and investment continues to decline this should further weigh on silver supply, which has been in deficit for the past 11 years.”

As such, future prices of silver are watched closely both by investors and the PV industry. However, there is a lack of consensus for future demand from the PV industry. In December, Reuters ran an article stating that silver demand from PV applications is expected to peak this year at 83 million ounces (2.4 million kilograms). Reuters cited its internal consultancy GFMS in stating that this is due largely to the declining amount of silver being used in each solar cell, and also cited the rise of copper metallization solutions.