Biggest Silver Supply Losers For 2015

As global financial and economic systems continue to disintegrate, this will put more stress on the silver market.  Why?  Because elevated physical silver investment demand will likely exceed available silver supply in the future.  Even though physical silver investment demand has fallen off since the huge spike starting in June, market conditions have impacted supply in a negative way.

According to the most recently released data, three of the top five silver producing countries are showing large declines in production compared to the same period last year.  When I researched the mine supply figures, I came up with some conflicting data.  For some strange reason, my data showed a decline in Mexican silver production, while figures from another source stated an increase.

I wrote the organization responsible for providing silver production figures to the Chile Copper Commission.  You see, the Chile Copper Commission (Cochilco.cl) provides global production data on many metals.  They use data from World Metal Statistics.

Here is a snapshot of their monthly world silver production update:

Chile-Copper-Commission-World-Silver-Production

Please click on the table to see a larger image.  If you look at Mexico silver production, they show an increase to 3,870.1 metric tons (mt) JAN-AUG 2015 up from 3,767.9 mt during the same period in 2014.  From this report, Mexico’s silver production JAN-AUG 2015 increased 102 mt, or 3% year over year (yoy).

However, I spoke with a person at Mexico’s Department of Mineral Resources (INEGI), and they sent me the link to their monthly silver production figures.  I downloaded the excel spreadsheet and made a screenshot show below:

Mexico-Aug-2015-INEGI-Silver-Figures

I added the total of Mexican silver production from JAN-AUG 2014 and 2015 and put the figures in the next column.  As you can see from Mexico’s official INEGI monthly data, silver production is down from 3,839 mt in JAN-AUG 2014 to 3,640 mt during the same period this year. 

So, instead of Mexican silver production being up 3% this year (according to data from World Metal Statistics), it’s actually down 6% if we go by official Mexico INEGI figures.

When I contacted World Metal Statistics about this inconsistency, they were nice enough to reply.  I asked them why was their Mexican silver production showing an increase while Mexico’s official data reports a decline?  They stated that they do use INEGI data for their Mexican silver production figures, but they use different data for the Chile Copper Commission.

That being said, they were surprised that Mexico showed a decline in silver production in 2015.  I sent them the excel spreadsheet from Mexico’s INEGI, and they told me that their data was different.  They replied to me stating that they had to update all their Mexican silver production data back to 2011… I gather their figures were based on incorrect data.  How interesting.

I find this quite interesting because it costs an individual 2,240 Euros to purchase 12 monthly metal production reports from World Metal Statistics.   Readers on my site get to find out this information for FREE.

NOTE:  I will be including a DONATE BUTTON on the site shortly.  After many requests from readers, I decided to finally add this function for the individuals who would like to donate for the public research and articles on the site.

While I used some of the silver production data (in the chart below) from the Copper Commission Table shown above, I double checked Peru’s and Australia’s silver production from their official state figures.. and they matched up.  That being said, I also have a problem with World Metals Statistics “Total World Silver Production Figures” shown at 17,967 metric tons (mt) JAN-AUG 2015 compared to 18,014 mt during same period in 2014.   These figures come from the Chile Copper Commission table above.

Basically, World Metal Statistics shows a small reduction in total global silver supply JAN-AUG 2015 compared to last year.  Even if we adjust the revised lower Mexican silver production data, total world silver production is only down 2.5%… again, according to their figures.

However, if we just go by the top five producers (Mexico, Peru, China, Australia & Chile), overall silver production in down 6%.  I gather World Metal Statistics is saying the rest of the countries are reporting increases to show just an average loss of 3% worldwide.  Unfortunately, some of the other countries such as Canada are reporting declines in silver production.

Here are the biggest silver supply losers for 2015:

Biggiest-Silver-Supply-Losers-For-2015

As we can see from the chart above, Australian silver production JAN-AUG 2015 is down a whopping 41% compared to the same period last year, followed by Canada down 32%, Mexico down 6% and Chile down 4%.  The combined silver production from these four countries is down 15% compared to last year.

Here is additional silver production data from three countries:

Russia’s Polymetal Jan-Sep 2015 = +53 mt

Poland’s KGHM Polska Jan-Jun 2015 = + 6 mt

United States Jan-Aug 2015 = -22 mt

If we just add up these three producers, we find a net increase of about 37 metric tons.  Of course, these show different periods, but an increase of even 40-50 mt for these producers won’t change the overall decline of the top five down 684 mt JAN-AUG 2015.

I would imagine the low metal prices going forward will continue to impact global silver production.  Chile, the largest copper producer in the world, is showing a 4% decline in silver production this year.  The majority of silver production from Chile is a by-product of copper mine supply.  As the price of copper continues to fall, we will see more companies shut down copper mines.  This will have a negative impact on global silver supply going forward.

I will be writing future articles on how the future silver supply, demand and price will impact the market in the next several weeks and months.

—————-

If you haven’t checked out THE SILVER CHART REPORT, there’s a great deal of information on the Silver Industry & Market not found in any single publication on the internet.  There is one chart in this report (Chart #19) that I can guarantee that 99.9% of precious metal investors haven’t seen before.

I use this bird’s-eye approach when I create my easy to understand charts.  The Silver Chart Report is a collection of my top silver charts from articles published over the past six years, and includes in-depth, never-before-seen charts and content that indicate that silver is on the rise. There are 48 charts in the report, broken down in five sections.

Please check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

15 Comments on "Biggest Silver Supply Losers For 2015"

  1. just a fyi- Ted Cruz talked about sound money and a return to the gold standard during the debate tonight.

    • Barry,

      As you know, Ted Cruz is a Senator from Texas and probably knows Texas Governor Abbott very well. We must remember, Gov. Abbott is the one that proposed a GOLD & SILVER Depository to be built in their state earlier this year. Once built, all their gold held in New York will be moved to their new depository.

      steve

      • “Once built, all their gold held in New York will be moved to their new depository.”

        Or so they hope!

        Maybe their atoms of gold have been moved east of NY.

  2. Small privately owned silver producers have the incentive and the means to misreport their production. Publicly traded producers can obviously fudge numbers but it is more difficult and there are then real penalties for getting caught. You gotta work with what you have. I just wish there were a better way to get these numbers.

    Mike

    • Mike,

      While some fudging of numbers may go on, I highly doubt it amounts to much. I have been following the miners for years and its quite easy to see how much they are producing by the amount of processed ore and average ore grade. Matter-a-fact, a lot of these primary silver miners sell their concentration to plants say in Mexico who actually smelt and refine the silver to dore bars.

      The Government of Mexico gets a royalty for mining, so they aren’t going to let these miners get away with that much theft in the way of under reporting.

      steve

  3. Steve,

    Very interesting article but it seems to clearly support the position that silver is not yet remonetised. That it is still treated as merely an industrial metal and, for the most part, a by-product or copper, lead and zinc mining.

    Gold is clearly already treated as money (monetised) as can be seen by the huge amounts being stockpiled by central banks. And while gold appears underpriced, it is still comfortably priced above most mines actual hard costs. Silver is trading at 75.7 to 1 ounce of gold when it is produced at only 10 ounces of silver for each ounce of gold. It seems clear that silver won’t be treated as money until the global fiat currency system starts to implode. Then there will be a mad scramble by everyone to buy as much as they can get their hands on as the price of silver spirals out of control

    I have two questions; 1. What is the price of silver that might make the copper, lead and zinc the “by-product” of mining? and 2. Don’t the China figures look faked? Two years, 2013 & 2014, absolutely identical with 2015 on course for a third identical year.

    Thanks,

    SteveW

    • Steve W,

      You are making some assumptions about silver that I do not agree. While gold is being acquired more than silver by Central banks, this does not impact silver negatively. Actually, it’s quite the opposite. Which is why I am writing my second paid report… THE SILVER MARKET REPORT.

      You cannot go by the gold-silver price ratio as a cost metric and compare it to the 10 to 1 ratio that is being mined. The reason gold and silver have that 73/1 price ratio is due to their current COMMODITY PRICING MECHANISM.

      It costs about $1,050-$1,100 to produce an ounce of gold today and about $15-$16 to produce silver. If you divide $1,075 by $15.5… you get almost 70/1. That is the way the ALGO’s are valuing gold and silver currently.

      So, gold is still be valued by its cost of production rather than its use as money or a store of value. Thus, both gold and silver are being treated like paper whores.

      steve

      • Steve

        I think the math is a little fuzzy but I am thankful that they are still being treated as “paper whores”. It has allowed me to buy a lot more than I could have otherwise.

        Still think the China numbers are PRC Central Committee BS!.

        Look forward to your next report.

        Thanks,

        SteveW

        • Steve W,

          Are you referring to the Chinese Silver Production figures? If so, I do think production is now declining due to the fact that nearly 60-70% of Chinese silver production comes from ZINC-LEAD mining.

          steve

          • I agree but their reported numbers don’t. For a country the size of China with a wide array of mines and deposits to have absolutely identical production reports for two years , 2013 & 2014, with 2015 on the exact same track is patently ludicrous.

            They are cooking their books.

            SteveW

  4. Any deficit in actual fizz is papered over at the comex (leveraged about 300:1) and shaken out from a weak-handed tree. When there is nothing more to be shaken out (and the miners are all wiped out) price action will turn. Till then, the smothering BS price action is likely to continue. However, the ultimate outcome for PMs is carved in stone. Be right and sit tight… Thanks Steve for all the great work you do, and good luck to you and all.

  5. What will you shake out?It seems that the miners can life with those prices!

    • silverfreaky’s comment is interesting- what it looks like to me is that as long as management can collect their salary, they will go on mining- one of the top three gold miner’s CEO is collecting the equivalent of several thousand ounces of gold a year, while the shareholders have taken a 75% haircut. (and they reelected him by a landslide) And one idiotic silver CEO who shall go unnamed, plows ahead in the name of “being a senior producer” instead of cutting back production which might have saved his shareholders some of their 90% haircut.

  6. Michael Ballanger | November 12, 2015 at 7:40 pm |

    The copper-shutdown-silver-supply-reduction argument is totally flawed. The big guys are already mobilizing slag heaps with hundreds of millions of tonnes of 10-ounce silver in order to reduce overhead and TRY to hit their “number”. Glencore has 200m ounces of Ag sitting in their waste dumps and that will be in the supply chain until their bread-and-butter metal (copper or zinc or gold) gets back above their AISC (“All-In Sustaining Cost”)…

    • Michael,

      Interesting theory. However, why did Glencore make a deal with Silver Wheaton at $900 million to sell forward silver production from its Antamina mine, if it had 200 million oz in its waste dump? Glencore sold 140 Million oz of future silver production (first 20 years) to Silver Wheaton at 20% of spot price.

      Again, why on earth would GLENCORE BEND OVER for that lousy deal if they could sell 200 million oz at spot?????

      Do you really think Glencore holds almost 25% of annual world silver mine supply in its waste dumps???

      steve

Comments are closed.