The overall global supply of silver is expected to grow 8% year-on-year in 2021, according to industry body The Silver Institute.
Mine production is also forecast to rise by 8% this year as output recovers after last year's pandemic–related disruptions, which led to a 5.9% decline in global silver supply last year. “This forecast pick-up in demand is predicated on a recovery in vehicle manufacturing, strong consumer electronics demand, and further gains from the solar sector,” the analysts said. “Jewelry and silverware demand should enjoy double-digit increases in 2021.”
Citing data from Metal Focus, a US-based independent precious metals research consultancy, the Silver Institute experts said that silver price would peak at $32 per ounce later this year and that it would average $27.30 overall in 2021, which would be the highest average silver price since 2013. This price level would represent a 33% increase compared to last year, when the metal's average price reached $20.55, which was in turn 27% higher than in 2019.
In 2020, total silver demand for the PV industry totaled 101.0 million ounces and in 2019 it reached 98.7 million ounces.
The analyst said the Covid-19 crisis revived investors' appetite for silver last year. “Strong institutional and retail investor demand, fueled initially by the onset of the pandemic, combined with intermittently lower silver prices, as well as an unprecedented wave of quantitative easing and fiscal stimulus across all major economies, led to the sizeable silver investment recorded last year.
“Although significant, this growth in the average price is still far away from any critical threshold that would make silver supply for the solar industry problematic,” Michael DiRienzo, executive director at The Silver Institute, told pv magazine in mid-February. “An average price of over $40, which would mean peak prices of around $45, would eventually become the critical limit to cross.”
In a recent interview with pv magazine, US analyst Matthew Watson said that the share of silver in PV module costs had risen by around 5% in recent months to account for approximately 10% of the total. “With PV module costs in the neighborhood of $0.018-$0.019/watt and silver representing around 10% of the overall module cost structure, and module and cell prices still declining, finding a means to lower the silver cost component is going to become an increasingly difficult task,” Watson stated. “Over the past 20 years, silver has averaged an 8.31% year-on-year growth in prices, which is greater than the current rate of design thrifting. This means lowering that silver $/watt component is going to be very difficult.”
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