Record global silver demand and a lack of supply upside have pushed the silver market to its second consecutive yearly deficit, with a shortfall of 237.7-million ounces last year, the Silver Institute reports in its 'World Silver Survey 2023'.

The 2022 market deficit is the most significant on record, the organisation said on Wednesday, adding that the combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years.

All major silver demand categories achieved record highs in 2022, with total offtake growing by 18% to 1.24-billion ounces last year. Silver industrial demand rose by 5% to a record 556.5-million ounces, physical investment increased by 22% to 332.90-million ounces and jewellery fabrication soared 29% to 234.1-million ounces. Exceeding jewellery in percentage terms, silverware demand in 2022 grew by 80% to 73.5-million ounces.

Since 2020, total demand has increased by 38% as world economies recovered from the Covid-19 pandemic.

On the supply side, mine production fell marginally last year to 822.4-million ounces. This followed strong growth in the previous year when production rose nearly 6% as mines recovered from the disruption caused by the pandemic.

Recycling activity rose for a third year in a row, with the 3% lift taking the total to a ten-year high of 180.6-million ounces. This was driven by a 7% rise in industrial scrap.

The Silver Institute reports that demand is expected to be solid this year. Industrial fabrication should reach an all-time high, boosted by continued gains in the photovoltaic market and healthy offtake from other industrial segments. Bar and coin demand, as well as jewellery fabrication, are expected to fall short of 2022’s exceptional levels, but both are forecast to remain historically high.

Supply, by contrast, is expected to achieve low single-digit gains, which should lead to a deficit of 142.1-million ounces – its second biggest in more than 20 years. The Silver Institute states that, adding up the supply shortfalls of 2021 to 2023, global silver inventories by the end of 2023 will have fallen by 430.9-million ounces from the end of 2020. “To put this into perspective, it is the equivalent of more than half of this year’s forecast annual mine production, and more than half of the inventories presently held in London vaults offering custodian services.”