Silver Market Shifts to Surplus as Demand Declines and Prices Stabilize

Silver is poised to shift from a prolonged supply deficit to a potential surplus by 2027, according to recent analysis. This shift is driven by declining demand in industrial and solar applications, particularly a nearly 30% drop in solar demand in China. Major brokerages now anticipate price stabilization rather than a return to the record highs seen earlier this year.

The silver market has experienced significant volatility. Prices surged from $30 an ounce in January 2025 to a peak of $121 in January 2026, before correcting nearly 65% to $57 by June. Currently, silver is trading between $60 and $61 an ounce. In India, silver prices followed a similar pattern, climbing from ₹100,000 per kilogram in January 2025 to ₹420,000 by the end of January 2026, then dropping to ₹194,000 in June. Domestic prices are now near ₹225,000 per kilogram, with silver down 8% over the last month and 14% for the year, though still 27% higher year-on-year.

The supply-demand balance is rapidly changing. The global silver deficit, which peaked at 237 million ounces in 2022, has narrowed to 46 million ounces this year and is expected to turn into a surplus by 2027. This transition is fueled by a decline in industrial demand, as manufacturers adopt cost-saving measures like thinner silver contacts and silver plating on copper. Meanwhile, silver supply is increasing, with mine output expanding and the London Metal Exchange holding a record 914 million ounces of inventory.

Brokerages predict silver prices will consolidate rather than revisit triple-digit highs. UBS projects prices at $80 an ounce, Commerzbank targets $95, and JPMorgan expects current levels to average next year. Institutions including Citi, Deutsche Bank, and HSBC forecast a lower consolidation range between $65 and $75 an ounce.