1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver...
Transcript of 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver...
1 Silver Institute
2 Silver Institute
THE SILVER MARKET IN 2017
–SILVER PRICES–DEMAND–SUPPLY
• Mine supply• By products:
– Copper/Zinc/Gold
–INVESTMENT–OUTLOOK
3 Silver Institute
SILVER PRICES
4 Silver Institute
SILVER PRICE IN DIFFERENT CURRENCIES IN 2017, Jan 2017 = 100
Prices in different currencies on an intra year basis: Silver in…
• Euro: - 14%
• GBP: - 11%
• Yen: - 5 %
• USD: - 4%
85
90
95
100
105
110
Silver Price in different currencies
US$/oz Eur/oz GBP/oz JPY/gram
5 Silver Institute
SILVER PRICE IN DIFFERENT CURRENCIES IN 2016, Jan 2016 = 100
Prices in different currencies on an intra year basis: Silver in…
• GBP: + 35% (-11%)
• Euro: + 20% (-14%)
• USD: + 17% (-4%)
• Yen: +15% (-5%)
100
110
120
130
140
150
160
170
Silver Price in different currencies
US$/oz Eur/oz GBP/oz JPY/gram
6 Silver Institute
SILVER DEMAND
7 Silver Institute
WORLD SILVER SUPPLY AND DEMAND
Moz 2013 2014 2015 2016 2017 Market share
% ∆ -2016 % ∆ - 2013
Mine Production 823 868 895 889 852 -4% 3%Total Supply
987 1,050 1,044 1,009 992 -2% 0%Jewelry & Silverware 280 288 290 257 268 26% 4% -4%Coins & Bars
241 234 292 208 151 15% -27% -37%Industrial Fabrication
605 596 583 577 599 59% 4% -1%Physical Demand 1,126 1,118 1,165 1,042 1,018 -2% -10%Physical Surplus/Deficit -138 (12%) -68 (6%) -121 (10%) -33 (3%) -26 (3%)
Annual Average Silver Price US$/oz 23.79 19.08 15.68 17.14 17.05 -1% -28%
8 Silver Institute
INDUSTRIAL FABRICATION OVERVIEW
2017 less 2016, Moz
Other Industrial
Applications
Jewelry
Coins & Bars
Silverware
Industrial Fabrication
Photography
Electric & Electrical
Brazing Alloys & Solders
Ethylene Oxide
Solar
No change
-57
+-
-1
15
4
622
9
2
-3
1
9 Silver Institute
GLOBAL JEWELRY & SILVERWARE FABRICATION, 2017
178 177 190 191 187221 226 227 205 209
58.4 53.2 51.9 47.5 43.8
59 61 63 52 58
0
5
10
15
20
25
30
35
40
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Moz
Jewelry Silverware Silver Price $/oz (RHS)
10 Silver Institute
WORLD RETAIL INVESTMENT SILVER DEMAND ANNUAL CHANGES: 2017 LESS 2016 (Moz)
5
-6
-50
-2
5.1
-5
-60-50-40-30-20-10
010
Moz
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
1213141516171819202122
1/5/
2016
3/15
/201
6
5/24
/201
6
8/2/
2016
10/1
1/20
16
12/2
0/20
16
2/28
/201
7
5/10
/201
7
7/19
/201
7
9/27
/201
7
12/6
/201
7
2/14
/201
8
Spot
$/o
z
Silver Spot
Silver American Eagle- 1 oz. ($/oz RHS)
SILVER COIN PREMIA
11 Silver Institute
WORLD SILVER IDENTIFIABLE INVESTMENT VOLUME AND VALUE
012345678
-500
50100150200250300350
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US$ B
nM
ozIdentifiable investment fell approximately 40% y/y in 2017 in volume and value terms
Bars & Coins ETP Inventory Build Total Identifiable Investment in US$ Bn (RHS)
Identifiable Investment is the sum of bars, coins and ETPs.
12 Silver Institute
SOLAR DEMAND – SILVER POWDER PRODUCTION
0102030405060708090
100
Moz
Solar Silver Powder Production
ChinaUSJapan
13 Silver Institute
ELECTRICITY GENERATION BY SOURCE
14 Silver Institute
SILVER USE IN AUTOMOTIVE
- Silver coated contacts- Infotainment systems- Window defogging- Heated seats- Luminescent display- 50 Moz in 2017 -> could be as much as
14% or 150 Moz by 2040
15 Silver Institute
WORLD PHYSICAL SILVER DEMAND (Moz)
642 528 634 662 600 605 596 583 577 599
236 230
242 239 231 280 288 290 257 268
198
95
150 213160
241 234 292208 151
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Moz
Industrial Jewelry & Silverware Retail Investment
16 Silver Institute
SILVER SUPPLY
17
Silver Institute
SILVER MINE PRODUCTION BY REGION AND ANNUAL CHANGE
Global mine production declined by 4.1% in 2017 to a total of 852 Moz (26,502 t), the second consecutive fall. At the regional level, losses in the Americas were partly offset by gains in India and Kazakhstan.
South America
32%
North America
28%
Asia21%
Europe13%
Oceania4%
Africa2%
Silver Output by Region 2017
500
550
600
650
700
750
800
850
900
950
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
World Silver Mine Production, Moz
-1%
0%
1%
2%
3%
4%
5%
2000
2002
2004
2006
2008
2010
2012
2014
2016
3-year CAGR in Mine Production
18
SILVER MINE PRODUCTION WINNERS AND LOSERS, 2017 VS 2016
Silver Institute
Russia (Rank 4)• 4.6 Moz, 10% decline yoy
Australia (Rank 8)• 8.1 Moz, 19% decline yoyArgentina (Rank 10)
• 4.2 Moz, 14% decline yoy
Mexico (Rank 1)• 10.1 Moz higher yoy
Canada (Rank 14)• 0.3 Moz, 2% decline yoy
19
SILVER MINE PRODUCTION WINNERS AND LOSERS, 2017 VS 2016
Silver Institute
China (Rank 3)• 2.2 Moz, 2% decline yoy
Peru (Rank 2)• 1.2 Moz, 1% decline yoy
Chile (Rank 1)• 7.5 Moz lower yoy
United States (Rank 9)• 3.3 Moz, 9% decline yoy
20
SILVER OUTPUT BY SOURCE METAL
World Silver Production by Source – primary, Lead/Zinc, Copper, Gold
28% 29% 30% 29% 30% 28%
38% 37% 37% 35% 35% 36%
20% 21% 21% 22% 23% 23%12% 13% 13% 13% 12% 12%
2012 2013 2014 2015 2016 2017primary lead/zinc copper gold other
Primary Silver Mine Supply % of World Production
2011
2014
2017
primary silver supply as % of total
29
30
28
80
90
100
110
120
130
140
150
160
170
180
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source Metal Index, 100=2007
primary lead/zinc copper gold
Silver Institute
21
ZINC MARKET FUNDAMENTALS AND OUTLOOKAlthough concentrate supplies to improve, we do not anticipate a quick return to a positive market balance. We currently estimate some 600kt of contained zinc supply coming from ramp-ups, expansions and restarts. Overall zinc supply in 2018 is expected to grow only moderately in line with a slow improvement in mine supply. Prices remain supported by low stocks and a weaker dollar.
-600-500-400-300-200-1000100200300
12,800
13,000
13,200
13,400
13,600
13,800
14,000
14,200
14,400
2014 2015 2016 2017 2018
Zinc Market Balance (kt)
balance global production global consumption
Africa 4%
Asia48%
Europe9%
Americas32%
Oceania7%
Mine Production by region (2017)
Africa Asia Europe Americas Oceania
Silver Institute
22
Warehouse Stocks and Treatment ChargesZinc stocks see increases in Q1 2018 after declining throughout much of 2017. Treatment charges for zinc are trending down.
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Warehouse stocks –zinc
Zinc (LME,COMEX,SHFE)
0
50
100
150
200
250
Zinc TCs
Zinc Conc. TC 50% CIF China U$/MT (Source: Asian Metal)
Silver Institute
Source: Asian Metals
23
COPPER MARKET FUNDAMENTALS AND OUTLOOKDespite the major supply disruptions that plagued copper in the early months of the 2017 and underpinned widespread talk of deficits, we estimate that the market was more or less in balance last year. A surplus is expected to develop again in 2018, albeit relatively modestly, before showing signs of contracting on a sustainable basis as the end of the decade approaches.
050100150200250300350400450
21,000
21,500
22,000
22,500
23,000
23,500
24,000
24,500
25,000
2016 2017 2018e 2019e 2020e
Copper Market Balance (kt)
balance (rhs) global production
global consumption
Africa10%
Asia20%
Europe10%
Americas55%
Oceania5%
Mine Production by Region (2017)
Africa Asia Europe Americas Oceania
Silver Institute
24
Gold Market Fundamentals and Outlook
The gold market is projected to remain in substantial surplus, although this narrows on improving demand from uptick in jewelry sector and ETF buying, the latter in part due to geopolitical tensions. Sentiment to improve, and a correction in equity markets to support rising gold prices.
-1% 0% 1% 2% 3%
Africa
Asia
Europe
Americas
Oceania
World total
3-year CAGR by Region (2017-2020)
3year CAGR
0100200300400500600700800
3,500
3,700
3,900
4,100
4,300
4,500
4,700
4,900
Gold Market Balance (tonnes)
balance (rhs)global supplydemand (inc. inventory build)
Africa19%
Asia27%
Europe10%
Americas33%
Oceania11%
Mine Production by Region (2017)
Africa Asia Europe
Americas Oceania
Silver Institute
25 Silver Institute
GLOBAL SILVER SCRAP SUPPLY
0%
5%
10%
15%
20%
25%
30%
0
50
100
150
200
250
300
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Moz
Scrap supply stabilized. Share of Total Supply RHS
China India North America Europe ROW Share of Total Supply
26 Silver Institute
SILVER INVESTMENT
ABOVE GROUND STOCKS
0
500
1,000
1,500
2,000
2,500
3,000IndustryGovernmentExchangeETPsCustodian Vaults
Moz
North America
18%
Asia49%
Europe33%
Custodian Vault Stocks by Region (excstocks allocated to ETPs
28 Silver Institute
INVESTORS’ POSITIONS IN COMEX SILVER FUTURES & OPTIONS
CFTC Managed Money• A lot of activity on the gross
shorts in 2017
• Current sentiment very bearish on Managed Money, record gross short in 2018
• Latest value US$ -3.23 Bn
29 Silver Institute
GLOBAL OTC SILVER TRANSFERS
0.00.51.01.52.02.53.03.54.0
- 20 40 60 80
100 120 140 160 180
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$TR
Bn
oz
Global Silver OTC Transfers Bn oz
Notional Value US$ Trn (RHS)
30 Silver Institute
GLOBAL ETP HOLDINGS, MARKET SHARE END-2017
010020030040050060070080020
0020
0220
0420
0620
0820
1020
1220
1420
16
Moz
Ishares48%
ZKB12%
Central Fund of Canada
11%
ETF Securities
9%
Sprott8%
Other12%
31 Silver Institute
PRICE OUTLOOK
32 Silver Institute
LONG TERM GOLD/SILVER RATIO
DISCLAIMER
The information and opinions contained in this presentation have been obtained from sources believed to bereliable, but no representation, guarantee, condition or warranty, express or implied, is made that suchinformation is accurate or complete and it should not be relied upon as such. Accordingly, Reuters Ltdaccepts no liability whatsoever to the people or organizations attending this presentation, or to any third party,in connection with the information contained in, or any opinion set out or inferred or implied in, thispresentation. This presentation does not purport to make any recommendation or provide investment adviceto the effect that any gold related transaction is appropriate for all investment objectives, financial situations orparticular needs. Prior to making any investment decisions investors should seek advice from their adviserson whether any part of this presentation is appropriate to their specific circumstances. This presentation isnot, and should not be construed as, an offer or solicitation to buy or sell silver or any other metal.Expressions of opinion are those of Reuters Ltd only and are subject to change without notice.
Thank you for your [email protected]