Silver price surge drives PV makers to cut silver usage further

From pv magazine Global

The silver price climbed to $44.86 per ounce this week, its highest level in a decade. That compares with an average silver price of $28.27 per ounce in 2024 and $23.35 per ounce in 2023.

“There are many factors contributing to this growth, but two in particular are pushing the silver price so high,” Philip Newman, managing director of UK-based market research company Metals Focus, told pv magazine.

Newman noted that this price increased over 30% in the past six months. “The US Federal Reserve has recently started to cut interest rates and may cut them further this and next year,” he said. “This is positive for gold and silver because it reduces your cost of carry.”

Reducing this cost makes silver and gold less expensive relative to interest- or income-generating assets, increasing their appeal to investors. That in turn puts downward pressure on the US dollar, as the metals are often viewed as a hedge against currency devaluation.

“I think gold is the main beneficiary of this situation, but silver is getting the positive spillover effects,” Newman said. “There are also concerns about stagflation, which may deliver further upside for silver and gold prices. And the uncertainty generated by the current geopolitical scenarios, of course. The uncertainty between China and the US, as well as the uncertainty surrounding the Chinese economy, are also weighing on the silver price.”

Newman said price volatility may be higher for silver than for gold, given the smaller size of the silver market.

“Despite this volatility, I don’t see risks of silver shortages for the PV industry,” he stated. “Silver industrial demand is not very strong at the moment. Even though the third quarter of the year is usually the strongest seasonally for the consumer electronics industry, tariff uncertainty saw many orders brought forward to the second quarter. The PV market is also weaker than normal at present, but that’s mostly because a lot of Chinese local demand occurred in the first five months of this year, before local subsidies were ended.”

He said that macro and geopolitical factors will keep pushing silver prices upwards both this year and next.

“It’s quite possible that we may see the $50 per ounce threshold being exceeded next year,” he added. “This may push PV manufacturers to further reduce silver loads in their products.”

He said that silver costs currently account for approximately 11% to 13% of module costs.

According to Metals Focus analysis, the PV industry saw average loadings fall by around 20% during 2024 and it may achieve a further reduction in loadings this year, which could exceed 15%. “Silver at $40 or around there or going higher is a huge challenge for the industry, but we’ve also seen how quickly some of the PV manufacturers can innovate as well,” he said.

Newman said he doesn’t believe that solar module prices may increase because of higher silver prices. “This is very difficult, mainly because the problem of overcapacity forced manufacturers to continue to compete on price and efficiency.”

He said he is also convinced that this situation may help copper-based products emerge and create more favorable conditions for heterojunction (HJT) solar technologies, which rely less on silver.

“HJT already adopted silver-coated copper paste on a large scale, and we now believe that HJT’s per-watt manufacturing cost could be lower than that of TOPCon cells when silver prices exceed $40,” he said. “However, this also forced TOPCon manufacturers to accelerate thrifting and substitution to maintain their competitiveness.”

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