The impact of the global coronavirus continues to result in surprising developments. Mexico is the next region to curb its silver production. It is believed that this situation may remain in place for a month or perhaps even longer.
Silver Production Slows Down in Mexico
Health concerns imposed by the global coronavirus crisis cannot be taken lightly. It is virtually impossible for non-essential businesses to remain operational during the current circumstances. This has also begun to affect companies involved in the production of precious metals.
In Mexico, there will be a major change for most silver mines. Multiple locations will have to shut down their operations for at least one full month. This measure isn’t entirely surprising, as similar restrictions have been put in place across the world.
These measures will have a severe impact on the global production of silver. It is estimated that Mexico produces 6,300 metric tons of silver in 2019. This represents 23% of the global mine supply, further stressing the importance of Mexican gold mines.
It is safe to say that Mexico is the largest silver-producing country in the world today. With its domestic silver mines now being shut down for at least 30 days, the country’s output will take a significant hit. Interrupts of silver-mine productions should make an impact on the market, albeit it is difficult to predict what will happen exactly.
No Automatic Silver Price Increase
One possible consequence to the decrease in silver production in Mexico is how it could affect the price of this precious metal. That being said, analysts are not convinced this will result in a higher price. A reduced supply of a commodity can happen every now and then. Industrial demand for silver has also decreased massively, potentially offsetting the production decrease impact.
There are also transportation issues to keep in mind. Mexico, but other countries as well, note issues when moving silver from one country to the next. These shipments are taken care of through air freight, but moving supplies has proven difficult. It would appear that most planes carrying air freight are not getting off the ground.
While the cards are stacking up to warrant a silver price increase, the market remains incredibly unpredictable. With lower demand, and no real increased interest from investors, the silver price may remain at a status quo for some time to come. Forecasting a market outlook is difficult these days, thus anything can happen when traders least expect it.