Gfms Sees Higher Silver Use Lifting Prices In 2010

NEW YORK May 27 (Reuters) - Rising investor demand and a recovery in
industrial demand during 2009 were key factors in a strong recovery for
silver prices last year, according to World Silver Survey 2010, released on
Thursday by the Silver Institute.

Compiled by London-based GFMS Ltd, a metals research company, the
annual report said the white metal's price will add to its gains this year
as Europe struggles with a sovereign debt crisis that threatens to
undermine a still fragile global economy. Price gains have also been driven by fabrication demand that has been
increasing as 2010 progresses, Philip Klapwijk, executive chairman of GFMS,
told Reuters in an interview. While the global recession caused fabrication demand to fall sharply in
the early months of 2009, a rebound began in the latter half of the year,
which has continued into 2010. "We're seeing a fair increase in demand," he said. But he added that
manufacturers and other industrial users of silver are cautious about the
strength of global economic recovery and therefore order the metal as they
need it, with very short lead times. "Demand has picked up very strongly and is healthy. But it would be
wrong to say that it is going gangbusters. There's a certain lack of
conviction about the recovery," he said. Demand for silver in medical applications and silver jewelry also
continue to remain strong and are expected to continue growing into 2010,
said Klawijk. The GFMS report expects flat supply in 2010 and solid gains in
fabrication demand, which should buoy prices this year. "If we look at supply, we expect some increase this year from mine
production to another record high level. Although, growth will not be that
strong, but there will be some growth. We are expecting against that,
though, a fall in silver recycling, due to continued decline in
photographic demand," said Klapwijk. A very high proportion of silver recycling comes from spent
photographic materials. And as the demand for traditional photography goes
down, so does the recycling, he added.
(Reporting by Carole Vaporean; Editing by John Picinich)