The global silver market is heading for its sixth straight annual deficit in 2026, but the shortfall has narrowed sharply. Interim figures prepared by Metals Focus for The Silver Institute and released this week put the gap at 35 million ounces, as total demand is forecast to fall 5% to about 1.08 billion ounces. For ASX investors, the report offers a useful check on whether the case for silver producers still holds after a brutal price correction.
Demand cools as prices retreat
Silver hit a record of US$121.65 an ounce in late January before sliding back towards US$50. That swing hit physical buying hard. Jewellery demand is expected to drop 22% and silverware 17%, with Indian buyers trading down to lighter pieces. Industrial use is tipped to ease 3% to 640 million ounces as solar panel installations, particularly in China, fell short and high prices pushed manufacturers to thrift silver. Excluding solar, industrial demand is still forecast to rise 4.5%. Exchange traded products are expected to see net outflows of 45 million ounces after heavy inflows last year.
Supply edges higher as recycling jumps
Mined supply is forecast to slip 0.5% to 834 million ounces, with lower output from Peru, China and Argentina offsetting gains in Mexico. The bigger shift is recycling, which is expected to climb 6% to 210 million ounces, its highest level since 2012, as elevated prices drew scrap back into the market. Even so, the cumulative deficit since 2021 now sits at roughly 746 million ounces, which helps explain why above ground stocks remain tight.
What it means for ASX silver exposure
The standout figure for equity investors is margins. Primary silver mines recorded average all in sustaining costs of US$16.27 an ounce in the first half, while margins rose 187% to about US$62 an ounce. That leaves producers well placed even at today’s lower prices, although local operations face their own hurdles, as seen when South32’s Cannington output fell 13% on paste fill delays. Developers such as Silver Mines, whose Bowdens project is nearing a final planning decision, may find financing harder to secure if sentiment stays soft. Our silver coverage tracks how these names respond.
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