• February 3, 2023
Silver Industrial Demand

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Need for Silver as an Industrial Commodity

Silver is among the most traded commodities in the world. It is a precious metal that has been used by humanity for millennia now. It is intrinsic to industrial demand in sectors such as electronics, medicine, etc. in fact, more than half of all silver consumption is for industrial purposes.

Silver in Charts: Supply/Demand Crunch After Years of the OppositeIt is primarily produced as a by-product in the production of other metals such as zinc, lead, copper, and gold. Almost 4/5th of all silver production is as a by-product, with exclusive mining accounting for only 20% of overall global silver production.

Silver often called the poor man’s gold, has seen an upthrust in the demands in recent years. As the industrial sector in India matures, the demand increases. Demand has been steadily increasing for industrial needs over the years.

Compared to gold rates, silver rates in India have been relatively undervalued. This is evident from the high ratio of gold to silver prices as compared to the past. As such, investors are looking at the long-term potential of this precious metal in terms of returns compared to its pricier cousin gold.

Silver is an important precious metal of:

  • great antiquity
  • increasing industrial applications
  • highest electrical conductivity
  • thermal conductivity
  • the reflectivity of any metal

Silver as an Industrial Commodity

Silver is a very useful metal apart from being a precious metal. The primary demand for it comes from industrial usage. It is used in the production of almost every electronic device such as tablets or smartphones. Silver’s industrial demand had risen four-fold through the early to late 20th century.

Resource Maven | Understanding Silver Demand SourcesSilver has:

  • High thermal conductivity as well as electrical conductivity
  • More versatile than copper, which has ingrained it in a large list of daily usage products such as alarm clocks, computers, cellphones, plumbing, wall switches, bathroom mirror, microwave, dishwashers, and the manufacturing of polyester clothing.
  • An intrinsic element in the production of photovoltaic cells which are used in automobile components and solar panels.
  • Used as a cathode in batteries and also in membrane switches in TVs. Silver oxide cells can be found in the manufacturing of hearing aids, toys, cameras, calculators, etc.
  • Become a mainstay in the production arena of indoor plumbing, cars, electricity, and aerospace technology.
  • More environmentally friendly than lithium-ion batteries and is used in electric cars, and consumer electronics, etc.
  • Used in the soldering and brazing of metals.
  • Many useful physical and chemical properties in varied industrial applications including the electrification of vehicles (EVs), 5G mobile phone technology, and importantly commitment of various governments to invest in ‘green’ infrastructure.

Applications in the Automotive sector

Do Electric Vehicles Make Silver the Investment of the Decade?

Silver will benefit from applications in the automotive sector – for example, in electrical contacts, microprocessors, memory and circuit boards, and radar and camera sensors.

The Silver Institute estimates that silver demand from the automotive industry will reach 88 million ounces by the middle of this decade (up from just over 60 million ounces in 2021). In 2040, electric vehicles could even devour almost half of the annual silver supply (a good 1 billion ounces).

  • Silver is essential in various automotive applications due to its superior electrical properties for safety and meeting tougher environmental standards.
  • In battery-powered vehicles, the use of silver will be markedly more than in conventional vehicles, used in charging stations, power generation, and other supporting infrastructure.
  • The installation of solar systems is driving the demand for silver higher.
  • The photovoltaic sector is currently demanding around 100 million ounces of silver annually. Some experts forecast an increase in silver demand to 185 million ounces over the next ten years from the photovoltaic industry.

The Government of India should take cognizance of the emerging scenario. Demand within the country is likely to grow rapidly with policy thrust on EVs and solar energy. As import dependence on the metal is set to increase it is necessary to work towards augmenting silver supplies from a long-term perspective.

Silver Rates Affected by Industrial Demand

The industrial usage of silver thereby influences the prices of the commodity in a big way. Any pickup in economic activity worldwide spurs the prices of silver. Silver demand can even increase during times of severe recession. Silver is used in three of the most basic requirements for humans – food, energy, and water.

As such, silver tends to show decent demand even during low economic growth. From photovoltaic cells to water purifiers, silver is present in one form or the other to make the appliance better.

Burgeoning industrial demand expected to underpin silver price – Resource World MagazineExperts believe that this mismatch in price trends points toward oncoming high rates in the future. Admittedly, 2020 and 2021 were not good years for the metal because of slowing industrial production.

Disrupted supply chains, raw material bottlenecks, and markedly higher energy costs adversely impacted industrial output. As much as 50% of silver demand is accounted for by industrial use.

The industrial metal character of silver is expected to gain more traction in the years to come. While the 2022 demand outlook for silver looks constructive, the best would come in the years ahead.

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