Silver demand rises in key regions

Demand for silver exceeded total new supply by 88.6 million oz. in 1992, the third consecutive year the market has been in a net deficit position, according to a survey released today by the Washington, D.C.-based Silver Institute.

Supply from mine production and secondary sources totaled 501.7 million oz. while fabrication demand equaled 590.3 million oz., said Dennis Wheeler, president of the institute and of Coeur d’Alene Mines (NYSE). The report also shows that silver use in Thailand, South Korea, Taiwan and Hong Kong totaled 53.7 million oz. last year, more than double the 24.2 million oz. these countries used as recently as 1990.

On the supply side in 1992, production cutbacks in key silver-producing countries, including Peru and Canada, were offset by higher mine output in Mexico, Chile, Australia, Papua New Guinea and several smaller producing nations.

The same pattern occurred on the demand side, the report says. In 1992, silver use fell 2.6% in major industrial regions of Europe, the U.S. and Japan but rose sharply in East Asia.

“The silver deficit could widen to 143.2 million oz. in 1993,” said Jeffrey Christian, managing director of CPM Group which wrote the report. “Stronger economic conditions in the U.S. and Europe, together with continued growth in Asia, will drive silver use higher. At the same time, refined silver production may fall sharply by 4%, reflecting declining mine production in the U.S., Peru, Canada and some smaller producing countries.” Thailand has emerged as a major consumer, according to the report. In 1986, the country used just 5.9 million oz.; in 1989, demand almost doubled, reaching 11.2 million oz. And by 1992, the country used 34.5 million oz., an increase of 485% over six years.

India remains an important market also, the report says. Last year, silver use in jewelry and silverware in the Indian market rose by 62.2%, to 30.5 million oz. from 18.8 million oz. in 1991. This increase boosted total Indian silver use (including industrial application) by 29.9%, to 57.8 million oz. in 1992 from 44.5 million oz. in 1991.

In addition to rising demand in these key regions, Mexico’s reintroduction of silver in circulating coinage is another promising new market. The Mexican government began using silver in 10-peso coins late last year. In early 1993, 20-peso coins also were being minted.

Photography is the single largest user of silver, consuming 185.6 million oz. last year compared with 187 million oz. in 1991. Photographic demand declined in the U.S. by 2.4% or 1.6 million oz., and also in Japan which dipped 3.6% to 58.8 million oz. In Western Europe, however, photographic demand increased 4% to 60 million oz. in 1992, surpassing Japanese silver use in this industry for the first time since 1989.

The World Silver Survey has been expanded to include demand statistics for growing Far Eastern markets such as South Korea, Thailand, Taiwan and Hong Kong. This extended coverage, including information on smaller European markets, is part of the institute’s effort to improve the information available on silver.

The report includes the institute’s review of world mine production. Copies of the survey may be purchased for US$30 within the U.S. and US$35 elsewhere from The Silver Institute, 1112 Sixteenth St. N.W., Ste. 240, Washington, D.C. 20036.

— Contributed by The Silver Institute of Washingon, D.C., an international association of silver miners, refiners, fabricators and manufacturers.