Rising industrial demand and supply shortages
A key factor behind the rise of silver is the growing demand for industrial applications, especially in electronics and renewable energy. Panelists at the 2024 LBMA Precious Metals Conference predict a supply shortfall of 215.3 million ounces, marking the second-largest shortage in more than two decades.
“The imbalance between supply and demand is becoming increasingly apparent,” said Mitchell Krebs, CEO of Coeur Mining. The mining sector is struggling to meet this increasing demand, and few new silver sources are coming online.
While recycling efforts could alleviate some of the pressure, current technologies are not advanced enough to significantly close the gap. With industrial use accounting for nearly 50% of silver demand, the supply shortage is expected to push prices up even further, possibly to $45 per ounce – a 40% increase from current levels.
Production and market impact of First Majestic Silver
In the third quarter of 2024, First Majestic Silver (NYSE: AG) produced 5.5 million silver equivalent ounces, up 4% from the previous quarter. This brings the company’s annual production to 15.9 million silver equivalent ounces, approximately 72% of their 2024 production target.
The company’s three underground mines in Mexico – Santa Elena, San Dimas and La Encantada – contributed to this achievement.
Despite strong production numbers, shares of First Majestic fell 1.45% to $8.83, possibly reflecting broader market concerns. However, the company’s increased production could stabilize or increase silver prices as supply tightens, provided demand remains robust.