Silver Market Heads for Sixth Straight Deficit as Inventories Continue to Shrink

The global silver market is heading towards another year in which demand exceeds mine supply, extending a shortage that has steadily eaten into inventories since 2021. 

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CLSA expects the market deficit to widen to 46.3 million ounces in 2026, from 40.3 million ounces last year. If that estimate holds, this would be the sixth consecutive year of a global silver deficit. 

Mine production, meanwhile, is expected to remain broadly flat. That leaves existing above-ground stocks doing much of the work in filling the gap between fresh supply and demand. 

Those reserves have already been drawn down substantially. CLSA estimates that about 762.1 million ounces of above-ground silver inventories have been depleted since 2021. That volume is close to an entire year of global mine production. 

The figures, based on World Silver Survey data cited by CLSA, have brought the physical availability of the metal into sharper focus. With mine output showing limited growth, another year of strong demand would mean continued reliance on inventories. 

Silver forms part of a wider metals supply squeeze 

CLSA’s assessment of silver sits within a broader view that supply constraints are becoming visible across several commodities. 

Copper, zinc, lithium, alumina, rare earths, tungsten and uranium are among the materials where the brokerage sees supply struggling to keep pace with demand. 

The challenge is not simply about bringing more mines into production. Exploration and drilling activity remain subdued despite higher commodity prices, while declining ore grades make extraction more difficult. New mining projects can also take years to move through permitting and construction before additional material reaches the market. 

Zinc is showing similar signs of tightness. Spot treatment charges have moved deep into negative territory, while inventories on the London Metal Exchange have fallen sharply. 

These conditions matter for silver because the precious metal is also produced as a byproduct of mining other metals. 

Hindustan Zinc brings the silver story closer to Indian markets 

For the Indian market, Hindustan Zinc provides a direct connection to silver because it produces the metal alongside zinc and lead. 

Vedanta owns approximately 65% of Hindustan Zinc. Silver is also identified as one of Hindustan Zinc’s core business segments, making movements in the metal relevant to the company’s earnings. 

Indian metal stocks have already responded to movements in silver prices. On September 8, Hindustan Zinc gained 1.59% during a rally in silver, while Vedanta and NMDC were also among the metal shares that moved higher. 

The longer-term issue, however, is the availability of physical silver rather than a single day’s movement in prices. 

A sixth consecutive deficit would mean the market continues consuming more silver than mines are supplying. After an estimated 762.1 million ounces have already been drawn from above-ground inventories since 2021, the ability of those stocks to continue filling the gap is becoming an increasingly important part of the silver market’s supply picture. 

For 2026, CLSA’s numbers point to that gap widening again from 40.3 million ounces last year to 46.3 million ounces while mine production remains largely unchanged.