Just How Important Is China to the Silver Market?

on Jun 1, 2012

On 14 May 2012, the Silver Institute announced in a press release, that it had commissioned a new report on the Chinese silver market. The report, which is expected to be released in October, will look into China’s growing importance in the global silver industry and will also identify emerging trends, which may have an impact on the broader market over the next few years.

The Silver Institute is an international non-profit industry association, based in Washington D.C., established in 1974, with its members including various silver mining companies, refineries, bullion suppliers, silver product manufacturers and wholesalers of silver investment products.
The Silver Institute notes in its press release that the Chinese silver market has experienced significant growth in the past two decades. Twenty years ago China accounted for as little as 3 percent and 5 percent of global silver demand and supply, respectively. Yet, these figures have undergone a considerable change, as according to the “World Silver Survey 2012”, another publication of the Silver Institute, in 2011, China’s silver demand climbed to 16 percent, whereas supply reached 14 percent, thus making the country the world’s second largest consumer and third biggest producer of silver. In addition, the Institute notes that in 2007, China switched from being a net exporter to a growing net importer of silver bullion.

This trend, however, is not limited solely to the white metal, considering that China is also among the world’s largest gold consumers and, as noted by the World Gold Council, the country is also the biggest producer of gold.
The Executive Director of the Silver Institute, Michael DiRienzo, notes that the report will explore China’s dramatic rise in terms of silver supply and demand, and will analyse the expected future trends in these variables over the next several years.!m[](/uploads/story/19/thumbs/Chinese_Silver_Panda_Coin_2_inline.png)

The Silver Institute also reports that observers of the Chinese market predict that silver demand will continue to grow over the rest of the decade, which will in turn increase the country’s importance to the global silver market. Nevertheless, one of the reasons for the growing silver demand in China is the country’s economic growth observed in the recent years, which declined in the first quarter of 2012. In addition, the Chinese premier Wen Jiabao set a 2012 growth target of 7.5 percent, compared to the 8 percent growth target which has been in place since 2005. For that reason, it would be interesting to observe whether the projected slower economic growth will also have an impact on the country’s silver demand, especially considering that there are already some concerns that it may negatively influence China’s gold demand growth.
In any case, the commissioned report on the Chinese silver market will shed light on future consumption and production of silver in the country and will outline future trends in terms of supply and demand.
The report will be prepared for the Silver Institute by Thomson Reuters GFMS and is expected to be released in October.


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