The global demand for silver increased by 4%, from 5,768 million ounces in 2016 to 5,999 million last year, mainly due to climbing demand from the PV industry. Most manufacturers use solar cell architectures that require the use of a conductive silver paste, making commodity prices of silver a pressing issue in PV manufacturing.
According to the report, prices have been dropping steadily from a peak of $18.23/toz in 2016. This was a significant increase from 2015, when the metal was traded at $16.06/toz. Prices rose again to $17.49/toz in Q1 of 2017 but have since taken a continuous downwards trend. Q4 2017 closed at $16.69/toz and prices fell further to $16.47/toz in March 2018. The short-term price prediction for silver is set at $16.91/toz by the end of 2019, according to the World Bank.
The long-term prediction to 2030 forecasts a significant drop in the commodity’s price, reaching $13.42/toz by then. Until 2021, however, the commodity price will not change by a greater margin, if the report is to be believed. Closing at $16.45/toz in 2021, the more significant decline of silver prices comes only after that, with an indicated prediction of $15.04/toz in 2025.
It is noteworthy that the report makes a distinction between a nominal and a constant U.S. dollar accounting format. The latter was used to present the numbers in this report and uses the dollar’s value in 2010 as a benchmark.
While Mexico remains the global top producer of silver globally, with 5,397 metric tons in 2017, China takes the lead in fabrication with just over 6,000 metric tons. In recent years, China and the U.S. have gone head to head as the biggest consumers of silver, treading lead position year on year by small margins.
Despite continued strong demand from the PV and electronics industries, investors are wary of a potentially looming trade dispute between the U.S. and China further reducing commodity prices. Improved production methods requiring reduced amounts of silver, or new technologies that manage to substitute the metal altogether have had a further downward impact on the commodity’s price. In support of that narrative, the indicative gold-to-silver price ratio rose to 80, from a 30-year average of 67, signifying considerable turbulence in the market.
The World Bank stresses in its report that the projection is subject to the effects of a changing value of the U.S dollar or changes in geopolitics. Therefore, clear predictions for the solar industry are hard to make.
This article was amended on 03/06/20 to reflect the World Bank stated global silver demand was 5,999 million oz in 2017, rather than 599 million as previously stated. Please note pv magazine, at this distance in time, has been unable to confirm the figure used in the report and has calculated the final ‘9’ digit based upon the statement the figure was a rise of around 4% from 2016’s 5,768 million oz.
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