The global demand for silver increased by 4% from 5,768 million ounces in 2016 to 599 million last year, mainly due to a climbing demand of 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 within PV manufacturing.
According to the report, prices have been dropping steadily from a prioce peak of $18.23 /toz in 2016. This was a significant increase from 2015, when was traded at $16.06/toz. Prices rose again to $17.49/toz in Q1 of 2017 but have resumed to 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 sets $16.91/toz by the end of 2019.
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 USD’s value in 2010 as a benchmark.
While Mexico remains at the global top producer of silver globally, with 5,397 metric tonnes in 2017, China takes the lead in fabrication with just over 6,000 metric tonnes. For the last years, China and the U.S. were head to head as the biggest consumers of silver, treading lead position year to year, by a small margin.
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 substiture the metal all together have had a further downward impact on the commodity’s price. In support of that narrative stands that the indicative gold-to-silver price ratio rose to 80 from a 30-year average of 67, signifying some considerable stir-up in the market.
The World Bank stresses in its report that the projection is subject to effects of changing value of the U.S dollar, or changes in geopolitics. Therefore clear predictions for the solar industry are hard to make.