Thomson Reuters GFMS: Silver to Average $15.51 in 2015

Thomson Reuters GFMS published its “Interim Silver Market Review,” commenting that it expects the silver price to average $15.51 per ounce in 2015. Through to November 13, the price had averaged $15.91, down 18.3 percent from the same period last year.
Other highlights from the report include:

• Total silver supply is forecast to fall to 1,014.4 Moz in 2015, down 3% from the previous year. This decline is expected to be driven by flat mine production, a 5% drop in scrap return, and net de-hedging of 12.6 Moz. Mine production is slated to total 867.2 Moz this year, up 0.3% from a year ago. This would be the weakest performance since 2002, when mine production fell by 2%. Healthy increases in primary silver mine production, particularly in Mexico, were partially offset by losses in silver output from base metals mines. Scrap supply is expected to fall for the fourth consecutive year, continuing a downward trend that began after annual average prices and scrap levels peaked in 2011.
• Total physical demand is forecast to contract by 2.5% in 2015, to 1,057.1 Moz, primarily driven by a 12.9 Moz drop in electronics demand. Demand from the electronics sector has been falling since 2011, largely owed to thrifting and the trend towards consumer electronics miniaturization. While these trends remain intact in 2015, the decrease has been precipitated by a weaker economy in China, where silver electronics demand is expected to decrease by 7.9 Moz, as well as in other developing countries such as India. China accounts for 28% of silver demand in global electronics fabrication.
• The silver market is expected to be in an annual physical deficit of 42.7 Moz in 2015, marking the third consecutive year the market has realized an annual physical shortfall. While such deficits do not necessarily influence prices in the near term, multiple years of annual deficits can begin to apply upward pressure to prices in subsequent periods. This year, however, net outflows from ETF holdings and derivatives exchange inventories on a year-to-date basis have lessened the impact of the physical deficit, bringing the net balance to ‑21.3 Moz.

Click here to read more key points from the Thomson Reuters GFMS report.