In 1999, for the first time in five years, silver production did not increase but rather declined, according to World Silver Survey 2000, published by the Washington, D.C.-based Silver Institute.
The decline created a sizable structural deficit, with fabrication demand exceeding supply from mine production and recycled scrap by nearly 156 million oz.
Overall, silver demand grew 5% last year, with gains reported in all of the major sectors. Industrial demand for silver was up 8%, to 343 million oz., mainly as a result of the boom in the electronics sector. This, together with strong growth in jewelry and silverware (up 5% to 260.8 million oz.), pushed demand levels to a record high. Photographic demand for sliver, long a mainstay, rose 1% to 246.4 million oz.
On the supply side, mine production slipped marginally while supply from recycled scrap dropped by 10%.
Supply gains were a reflection of official sector sales, principally related to stock disposals from the People’s Bank of China. According to the survey, had there not been such a large reduction in Chinese bullion stocks, the silver price would have been forced even higher. The average price for silver in 1999 was US$5.22 per oz.
Mexico is the world’s largest producer of silver, with 75.2 million oz.; Peru is second, with 71.3 million oz., followed by the U.S., with 62.9 million oz.
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