Brochures Silver

8/3/2019 Brochures Silver

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SILVER


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INTRODUCTIONINTRODUCTION

Silver (Ag) - is a metallic chemical element and a soft, white, lustrous transition metal. It has the highest electrical

conductivity of any element and the highest thermal conductivity of any metal. Silver is very ductile and malleable with a

Silver is found in native form, as an alloy with gold, and in ores.The principal sources of silver are the ores of copper, copper-nickel,

lead, and lead-zinc obtained from Peru, Mexico, China, Australia,

Chile, Poland and Serbia. Peru and Mexico have been mining silver

since 1546 and are still major world producers. Top silver-producing

mines are Proao / Fresnillo (Mexico), Cannington (Queensland,

Australia), Dukat (Russia), Uchucchacua (Peru) and Greens Creek

mine (Alaska).

The metal is primarily produced through electrolytic copper

is at least 99.9% pure, and purities greater than 99.999% are available. In 2008, Peru was the worlds top producer of silver,

closely followed by Mexico.

PRIMARY APPLICATIONS

together represent more than 95 percent of annual silver consumption.

Traditional uses

Coins Silver has been used as a medium of exchange thus

interchangeably used with term money. Until late 19th

century, most nations were on a silver standard with silver coins

forming the main circulating currency. Although gold was also

used in coinage, its higher value was not practical for everyday

payments. Today, Mexico is the only country currently using

silver, albeit in small amounts, in its circulating coins

Silver-based photography is based on light

in light intensity form negative images which can then be processed into paper pictures by using silver-imbedded

paper. Because of the growth of digital photography, the use of silver-based imaging by consumers has been

Silverware & table settings Silver jewelry for its brilliant luster and of its ease of fabrication is

make silver ideal for jewelry also cross over into silverware.

uses

& Bearings - Many batteries - rechargeable and disposable - are manufactured with silver alloys as the

cathode. Steel ball bearings electroplated with silver have greater fatigue strength and load carrying capacity

than any other type.

Brazing and Soldering - Silver facilitates the joining of materials - called brazing when done at temperatures

above 600 degrees Celsius and soldering when below - and produces naturally smooth, leak-tight and corrosion-

resistant joints.

televisions, microwave ovens, computer keyboards, conventional switches, printed circuit boards etc.


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GLOBAL PRODUCTION

Global mine production rose by almost 4% in2009, its seventh straight annual increase to reach a record high of 709.6

Million ounces (Moz). Output was driven higher by strong production increases in several Latin American countries as

mining projects, many of which are primary silver producers, came to fruition, and by higher output in Asia, principally

from China and Turkey.

Rank Country Production(2009)(millionsofounces)

1 Peru 123.9

2 Mexico 104.7

3 China 89.1

4 Australia 52.6

5 Bolivia 42.6

6 Russia 42.2

7 Chile 41.8

8 USA 39.8

9 Poland 39.2

10 Kazakhstan 21.7

Rank Country Production(2009)(millionsofounces)

11 Canada 19.6

12 Argentina 17.1

13 Turkey 14.0

14 Sweden 8.7

15 Morocco 8.3

16 Indonesia 7.7

17 India 7.3

18 Guatemala 4.2

19 Iran 3.520 South Africa 2.6

GLOBAL SILVER MINE PRODUCTION

Sr. No. Year Global MineProduction(Moz)

1 2003 600.6

2 2004 621.1

3 2005 643.8

4 2006 647.4

5 2007 670.6

6 2008 680.9

7 2009 709.6

Factors - Supply

Silver mine production rose by 4% to 709.6 Moz in 2009. Rise was mainly from primary silver mines and as a by-

product of gold mining.

Regionally, the strongest growth stemmed from Latin America, where silver output increased by 8 percent, with the

most visible gains recorded in Argentina and Bolivia.

Peru was the worlds largest silver producing country in 2009, followed by Mexico, China, Australia and Bolivia. All of

these countries saw increases last year except for Australia, where output from the lead/zinc sector declined markedly.

World silver mine production is expected to rise by 3% y-o-y in 2010, lifted by strong output from gold by-product mines.

Scrap supply forecast to rise by 11% in 2010, despite ongoing declines from the photographic sector. This is relatively

price inelastic, as are the other two main sources of scrap recycling industrial scrap and jewelry scrap.

Net silver supply from above-ground stocks dropped by 86 percent to 20.2 Moz in 2009, driven mostly by the surge

in net investment, higher de-hedging, lower government sales and a drop in scrap supply.

With respect to scrap supply, 2009 saw a 6 percent decrease over 2008s to a 13-year low of 165.7 Moz. This

represented the third consecutive year of losses in the scrap category.

Government sales set to rise in 2010.

Global primary silver supply recorded a 7 percent increase to account for 30 percent of total mine production in 2009.

Overall supply expected to rise by 5% in 2010.

INTERNATIONAL SCENARIOINTERNATIONAL SCENARIO


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inventory cuts in the industrial supply pipeline, combined with a protracted decline in end-user orders, for

example from a far weaker automotive industry, were the primary reason for lower industrial demand last year.

Photographic demand continues to contract, mainly due to ongoing substitution by digital technology.

Implied net silver investment increased by a staggering 184 percent to 136.9 Moz last year, recording its highest level

in the past 20 years.

While overall jewelry demand dipped slightly by only 1.1 percent in 2009 to 156.6 Moz, India and China posted

Silverware demand reversed the trend of the last decade rising by a respectable 4.6 percent to 59.5 Moz, largely dueto a surge in Indian fabrication.

Jewelry & Silverware demand combined will decline marginally y-o-y in 2010.

Coin demand will continue to rise.

WORLD SILVER DEMAND (IN MILLION OUNCES)

DEMAND 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fabrication

Industrials Applications 374.2 335.6 340.1 350.8 367.6 407.0 427.0 456.1 443.4 352.2

Photography 218.3 213.1 204.3 192.9 178.8 160.3 142.4 124.8 104.9 82.9

Jewelry 170.6 174.3 168.9 179.2 174.8 173.8 166.3 163.5 158.3 156.6

Silverware 96.4 106.1 83.5 83.9 67.2 67.5 61.0 58.4 56.9 59.5

Coins & Medals 32.1 30.5 31.6 35.7 42.4 40.0 39.8 39.7 65.2 78.7

Total Fabrication 891.7 859.4 828.3 842.4 830.8 848.7 836.4 842.5 828.6 729.8

Producer De-Hedging 27.4 - 24.8 20.9 - - 6.8 24.2 11.6 22.3

Implied Net Investment - 11.4 - 6.0 37.4 67.6 64.0 22.0 48.2 136.9

TOTAL DEMAND 919.1 870.9 853.1 869.3 868.2 916.3 907.2 888.7 888.3 889.0

41%

24%

14%

9%

9%3%

2009 (ACTUAL)

Industrial

Jewelry & Silverware

Investment

Coins

Photograph

De Hedging


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Investment Summary

investment demand has seen the same support from events driving gold investment, namely: US dollar

commodities as an asset class.

price has acted as an with silver also regarded as an industrial metal from economic

recovery and fast growth in countries such as China.

greater volatility and trading range than gold makes it attractive to certain investors Small market size value

of total supply forecast at less than $19bn in 2010 compared to $170bn for gold means silver price is very highly

World Trading Markets

is predominantly traded on the London Bullion market Association (LBMA) and COMEX in New York.

is the global hub of over-the-counter (OTC) trading in silver and is the main physical market. A bidding process

is the US based futures and options exchange that operates as a Designated Contract Market (DCM) for the

CME group, and is a primary platform for Silver as well as Aluminium, Copper & Gold derivatives.

Silver Statistics

2007 2008 2009 2010 3Q2010 4Q2010 Dec-10 Jan-11

London Prices (US$/Oz)

Daily Fix 13.39 15.02 14.65 20.16 18.96 26.43 29.35 28.4

Parity (London) Prices

India (Rupee/Oz) 553.86 646.87 714.88 929.09 884.36 1198.71 1346.28 1308.67

COMEX - Futures Contracts

Stocks (Moz) 129.2 134.1 117.6 108.6 97.3 107.8 105.8 102.9

Vol (million contracts) 7.6 8.3 7.8 12.5 11.8 13.3 1.3 1.4

OI ('000 contracts) 120.9 124.1 105.1 129.6 134.5 142.6 136.9 123.4

CFTF (Futures only data) NON COMMERCIAL

Net Positions 30,780 33672 30407 36412 38875 34351 32119 28226

Other Indicators

Gold/Silver Ratio 52.3 60.89 65.07 60.9 62.2 49.4 47 46.6


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Silver Imports (tonnes)

USA 4985 4676 3775

UK 2943 2809 4638

Japan 1389 1909 1200

India 1958 5048 1259

Italy 1235 926 701

Hong Kong 3972 3082 2671

China (Exports) -4500 -4043 -3554

DOMESTIC SCENARIO

imports its entire Silver requirement.

Gujarat & Jharkhand are the three silver producing states. Production ranges from 15 MT to 55MT.

demand for silver in India is close to 2500MT - 3200MT comprising 50% demand from Industry, 39% fromJewelry & Silverware, 9% from Coins & 1% each from photography & Net implied investment.

of the total demand is met through imports, 18.8% from secondary silver & 2.5% from Hindustan Zinc which is

the largest producer of silver in India.

is worlds largest importer of Silver.

2009, silver imports were about 1000 MT, lower as compared to 2008 due to high silver prices.

is estimated that silver imports will be around 1200 MT in 2010.

of the imports close to 50% is from China.

SILVER

STEP 1 SPOT PRICE ($) (XAG) = 35.7

BANK PREMIUM ($) = 0.02

CONVERSION = 32.15

1148.42

STEP 2 RUPEE:DOLLAR (EXCHANGE RATE) = 45.15

51851.37

STEP 3 IMPORT TAXES 1545

CONVERTED SILVER PRICES 53396.37

Note: Above rates prices are indicative & subject to

change depending on market conditions.

Important Links

www.gfms.co.uk

www.lbma.org.uk

www.nymex.com

www.tocom.com.jp

www.silverinstitute.org


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For further details, please refer to the NCDEX website http://www.ncdex.com/Contact our Product Managers for any queries/information:

Prashant Reddy : 09910995919, SomeshVaidya: 09819161117

NCDEX SILVER FUTURES CONTRACT SPECIFICATIONS

Name of Commodity Silver

Ticker symbol SILVER

Trading System NCDEX Trading System

Basis Ex - Ahmedabad inclusive of Custom Duty, exclusive of local sales tax/VAT, and any other charges and levies

Unit of trading 30 Kg

Delivery unit 30 kg

Quotation/base value

Tick size Re. 1

QualityList of approved is available at:

Quantity variation +/- 10 per cent at bar level.

Delivery center Ahmedabad (Within a radius of 50 Km from the municipal Limits)

Additional delivery centres None

Trading Hours

As per directions of the Forward Markets Commission from time to time, currently Mondays through Fridays : 10:00 AM to 11:30 PMSaturdays : 10:00 AM to 02:00 PMOn the expiry date, contracts expiring on that day will not be available for trading after 5 PM.The Exchange may vary the above timing with due notice.

Tender Period

Tender Date TTender Period:Tender period would start from one working day other than a Saturday, prior to the last working day of thecalendar month prior to the expiry date of the contract.Pay-in and Pay-out: on a T+1 basis. If the tender date is T then, pay-in and pay-out would happen on T + 1 day. Ifsuch a T + 1 day happens to be a Saturday, a Sunday or a holiday at the Exchange, clearing banks or any of the

Due Date/ Expiry Date

Expiry date of the contract:The contract expires on the 3rd of the expiry month. If 3rd happens to be a Saturday or holiday then the contractwill expire on the succeeding working day.The settlement of contract would be by a staggered system of Pay-in and Pay-out including the Last Pay- in andPay-out which would be the Final Settlement of the contract.

Delivery

Upon expiry of the contracts all the outstanding open positions should result in compulsory delivery. The penalty structure for failure to meet delivery obligations will be as per circular no. NCDEX/TRADING-086/2008/216 dated September 16, 2008.During the Tender period, if any delivery is tendered by seller, the corresponding buyer having open positionand matched as per process put in place by the Exchange, shall be bound to settle by taking delivery on T + 1day from the delivery centre where the seller has delivered same.

Closing of contract

Clearing and settlement of contracts will commence with the commencement of Tender Period by compulsorydelivery of each open position tendered by the seller on T +1 to the corresponding buyer matched by theprocess put in place by the Exchange. Upon the expiry of the contract all the outstanding open position shouldresult in compulsory delivery.

Opening of contractsTrading in a new contract will open on the 1st day of the month in which any contract is due to expire. If the 1sthappens to be a holiday, contracts would open on the succeeding working day.

No. of active contracts As per launch calendar

Price band

In case of price movement in International markets which is more than the maximum daily price limit (currently9%), the same may be further relaxed in steps of 3% with the approval of FMC.

Position limits

Member-wise position limit - Maximum of 300 MT or 15% of market-wide open position whichever is higher -For all silver contracts combined together.

Client-wise position limit - 60 MT For all Silver contracts combined together.

to case basis.Quality Allowance (forDelivery)

Special margin Exchange, may be imposed on either the buy or the sell side in respect of all outstanding positions. Removal ofsuch Margins will be at the discretion of the Regulator/Exchange.

Additional marginIn addition to the above margins the Regulator/Exchange may impose additional margins on both long and

Regulator/Exchange

Final Settlement PriceThe Final Settlement Price shall be the last spot price of the day as polled by the Exchange on the last tradingday of the contract

Maximum Order Size 1500 Kgs.

Documents

Brochures Silver