Originally posted on www.bnamericas.com
Looking ahead
Despite some selling pressure from disenchanted investors, projections indicate that overall net silver investment demand will rise to approximately 134Moz in 2025, bolstered by persistent economic and political uncertainties, according to CPM expert Rohit Savant.
“There’s more reason to be buying and holding portfolio diversifiers like gold and silver. So, we expect that a lot of that selling will reduce. That said, every time silver prices get to key technical levels like US$34, US$35, you’re probably going to see some selling, which could weigh on the net investment amount,” the analyst said.
Savant explained that manufacturing demand has reached record highs, particularly driven by the solar industry, though other sectors are showing slower growth. While the electronics sector experienced a resurgence last year, anticipated economic challenges may restrain demand moving forward.
Silver supply
The total silver supply is expected to reach new heights in 2025, following a record 1.06Boz in 2024, with increased mine production and a robust scrap supply anticipated. However, CPM Group warned that the overall health of the mining sector remains fragile, as investment levels and new projects have been slow to come to fruition.
“This year we project total supply to reach a fresh record high level of 1.09Boz and that increase is expected to come from both an increase in mine supply as well as scrap supply,” Savant said.
“Last year, you had three new silver-producing mines that came on stream, which added around 7Moz of new silver mining capacity. The new silver mining production capacity is projected to reach 16.6Moz in 2025, which would be the highest that it’s been since 2016 when it stood at 19.1Moz,” he added.
“While there’s an impressive amount of new capacity expected to come on stream this year, if you take the three-year average between 2023 and 2025, that average is around 7.8Moz, which is just a little bit higher than the average between 2021 and 2022, which stood at 7.3Moz.”
Savant said the reduced amount of new mine capacity in recent years has been one of the main reasons mine supply has not grown substantially. “And that new mine capacity reduction has to do with the lower investment in the mining sector, which has also been an issue that’s been in place for some time.”
“You have been seeing some increase in investments in the mining sector in recent years, in the past two, three years. But the lead times for bringing these mines on stream have also increased and now stand at around 18-20 years because of the amount of regulations,” he said.
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