The following was provided in the Jan. 20 Metals Focus, Valcambi Suisse:
Valcambi Suisse is reporting that South Korean silver bullion imports into the U.S climbed in 2014, for the first time in three years.
The latest release of U.S. trade data confirmed the surge in [South] Korean silver bullion imports, for the first time since 2011. At that time, the closure of Doe Run in Peru, combined with healthy industrial, coin and bar demand, saw 49s premiums shoot up, from normal levels of 2-3 cents to over 20 cents. This saw imports surge from a range of new suppliers, including [South] Korea, as traders scrambled to satisfy U.S. demand. Last year, although conditions were not nearly as frenetic in the U.S., [South] Korean imports jumped. There were two reasons for the rise in Korean imports in the U.S. last year.
Arguably most important was the sharp drop in Canadian silver mine supply, which fell by over 20 percent to around 15 million ounces, the lowest total in our eight-year series. This was largely due to the suspension of Alexco’s Bellekeno mine in the third quarter of 2013 (which had produced 1.5 million ounces in 2013) and much reduced output at Agnico Eagle’s LaRonde mine (to an estimated 1 million ounces). This contributed to a 26 percent, or 13-milloin-ounce, drop over the January to November 2014 period, in reported U.S. bullion imports from Canada.
Against this decline, U.S. silver fabrication is estimated to have risen in 2014, driven by strong physical investment buying. In addition, U.S. silver jewelry fabrication continued its upturn, bolstered by improved consumption at the retail level. Finally, the rise in U.S. silver powder exports last year (with gross volumes up by 11 percent over the first 11 months) points to an upturn in the country’s silver industrial offtake.
To make up for the apparent shortfall, U.S. silver bullion imports from [South] Korea jumped, from a little over 1 million ounces in 2013 to more than 10 million ounces last year (basis the first 11 months). For 2015, Canadian output is forecast to remain near 2014 levels, which could therefore see U.S. bullion imports from “non-traditional” sources remain at elevated levels.
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