Industrial Use of Silver Forecast to Rise

The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million used in 2010, according to a report from the Silver Institute released Monday.

The report, The Future of Silver Industrial Demand, was produced on behalf of the Silver Institute by the precious metals consultancy GFMS Ltd. Industrial use of silver accounts the largest share of annual fabrication demand, the Silver Institute said.

The "base case" forecast from GFMS is predicated on what the consultancy sees as the most likely outcome for the global economy, the consultancy said.

The report identifies 11 still-new applications for silver, ranging from food packaging to radio identification tags to auto catalysts, which collectively could exceed 40 million ounces of industrial demand by 2015, said the Silver Institute.

The report also said that stronger silver industrial demand in the U.S. and Asia will be a key factor driving growth through 2015, with healthy developing-country demand especially in markets such as China and India.

Much of the forecast growth will come from established applications, such as silver's use in electrical contacts and in the photo-voltaic market. The "technical proficiency of silver" limits the ability to switch in favor of lower-cost alternatives.

The report recounted steady growth in industrial demand for silver for two decades now, interrupted only briefly by financial-market weakness in 2001 and 2008. Back in 1990, this demand stood at 273 million ounces, meaning it has already grown by 78% to 2010.

PV use of the white metal was developed over two decades ago, but until recently, silver offtake remained slight, the report said.