The latest released ‘World Silver Survey 2015’ report by The Silver Institute and Thomson Reuters GFMS predicts drop in worldwide silver output during 2015.
The production loss from ageing mines across the world is likely to outclass the increased supply from new mines. This will be the first drop in silver production in more than ten years.
The report states that global silver production edged higher by almost 5% in 2014 to 877.5 million ounces. The output during the year hit new record, with major production gains reported from Central and South America. Primary silver mine production grew 8% and accounted for almost 30% of the global silver mine supply. However, the investment in new mine capacity is expected to slow down during the year. Consequently, silver mine supply may decline during the year.
The weakness in silver prices has led to uncertainty among global investors. Silver prices lost nearly 36% during 2013. In 2014, it lost almost 20%. The losses in silver exceeded those in gold and other precious metals. Although, silver has recovered almost 6% so far this year, the prices still continue to struggle around five-year lows. The sharp decline in prices has made investors run away from silver mines.
Also, nearly 70% of the silver is produced while mining other metals such as gold, copper, lead and zinc. The collapsing prices of these commodities may limit mining of these metals, which in turn may lead to contraction in silver supply.
According to the report, India’s demand for silver jewellery has surged by nearly 47% to 62.2 million ounces in 2014. Going forward, India is likely to take the lead, outranking China as the world’s largest consumer.
Although silver prices are likely to witness short-term challenges, it may end 2015 at more than $17 per ounce. The prices are likely to register modest increases in 2016 and 2017.