Silver Mining Output At Record, But Thrifting Hits Scrap Supply

May 14, 2015


India saw a big fall in re-sales of silver jewelry, with households detered from selling both by the economic recovery and by the continued plunge in world silver prices. But the largest drop by weight came from the world's largest scrap supplying nation—the United States—which saw a drop of more than one-quarter.

This marked "a stark change from prior years," because where electronic waste had previously fed a growing recovering and recycling trade, 2014 saw "the impact of substantial...aggressive thrifting activity among electronics manufacturers amid rising now starting to feed through into markedly lower silver content recoveries."

Industrial and technological silver use accounts for some 55-60% of annual demand on average. Following the surge in silver prices from $10 to nearly $50 per ounce between 2008 and 2011, a study by David Jollie at Mitsui Global Precious Metals earlier this year, looking at certain keywords in patent abstracts and allowing for a 2-year delay between the start of research and patent application, found that scientists were targeting industrial cost-savings by reducing silver use.


Silver Patent Activity


Thrifting of silver has been most dramatic in the solar (or “photovoltaic”) sector, cutting the quantity used in each cell by 80% compared with 5 years ago and "perhaps going as far as it can," according to a 2015 silver outlook from Canadian bullion bank Scotia Mocatta.

Given a 2-year lag between changes in underlying silver prices and new patents seeking to reduce use, "It seems likely that thrifting of silver use in current applications should continue for some time," Jollie concluded, "albeit at a slower pace."

The impact of current thrifting on future scrap supplies back to the market will also likely be limited. Because while the United States is the world's No.1 generator of electrical and electronic waste, silver recovery from that e-waste "accounts for only a single-digit share" of the country's total silver scrap supply.

Meantime in silver mining, cost-cutting since the price crash of 2013 means the recent surge in new-project output is set to end in 2015, GFMS says, with total production flat-lining from last year's new record high.

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