ETP inflows add gloss to silver , but waning industrial demand disquieting

NEW YORK (Scrap Monster) : The plunge in silver prices has induced significant investor interests. The outlook for the white metal is looking dim weighed down by fears of lowering industrial demand. Impending overcapacity fears have raised concerns regarding the future plight of the metal.

The Silver prices have tumbled by nearly 14% during the month of April which witnessed the more precious gold falling to lows. The sharp fall in silver prices pulled investor attraction towards it. Silver ETP holdings saw an inflow of $800 million. The retail interest in the metal had been overwhelming. The US Mint silver coin sales during the first four months of the year have gone through the roof.

Though the precious metal side of Silver looks robust, the prospects of Silver as an industrial metal are seen waning. Nearly 50% of the silver usage accounts for industrial purposes. The global market is presently strained by oversupply concerns. According to estimates, the global silver market is said to be in 4,000 tonnes excess. Mine supplies recorded a huge growth by adding 30,000 ounces last year. Meanwhile, the fabrication demand fell by almost 50% during the period.

For many years, the industrial use of silver has been boosted by solar panel industry. With the global solar panel demand forecast to fall drastically, the silver demand will follow suit. The 18% global solar panel demand recorded in 2012 is feared to fall to 9% this year. This will severely affect the silver demand in turn. The demand for the metal from electronics and photography industry is also seen weakening during the course of the year.