But now such fast growth is by overshadowed by a 3.5-fold growth in consumption of zine, he added. Electronic manufacturing demand was likely to continue to rise as China makes more of the components such as circuit boards needs for assembly, many of which are still imported. That bodes well for China's silver demand, but would not necessarity increase global consumption as demand would be transfered from electronic manufacturing elsewhere, Lloyd said.

    About 70 percent of China's silver consumption is in the industrial applications, mainly electronics. Rapid growth in the industry has accelerated with the global economic recovery from the financial crisis. China produced 232 million computers in the first 11 months of last year, up 25 percent from a year earlier, and 895 million mobile phones during the same period, up 34.4 percent on the year, according to the
National Bureau of statistics. A typical mobile phone contains about 0.35 grams of silver, the U.S. Geological Survey said in a report on mobile phone recycling. The photovoltaic industry, another silver consumer, has also seen fast growth. It was the only industry worldwide that saw increased demand for silver in 2009, when other industrial users took a hit from the crisis. said GFMS and The Silver lnstitute in a report. Silver demand in the industry was estimated to have reached 870 tonnes in 2009, up 30 percent on the year. Demand could reach 5,800 tonnes per annum by 2020, the report said, But the photovoltaic industry is still in its infancy, and some analysts said it is too early to see it as a significant silver user.

    Now China's silver mine production is the world's third highest after Peru and Mexico. Due to a lack of reliable data on the amount of silver recovered from base metal concentrate imports, estimates on overall supply vary. Overall silver output, including secondary silver, at 10,566 tonnes in the first 11 months of 2010, is up 13.05 percent on the year, the China Nonferrous Metals lndustry estimated, On an annualised basis, this is equivalent to 11,527 tonnes, up 11 percent on the year. CRU Group estimates that in 2009 China’s mine supply reached 2,825 tonnes. silver recovered from imported base metal concentrate came to about 2,500 tonnes, and total supply, including recycled metal and
imports, at 7,850 tonnes.

    Investment demand from China’s growing middle class could also fuel demand for the metal, Investors rushed to buy gold in 2010, driving the country’s gold consumption up 55 percent to 650 tonnes, by Macquarie’s estimate. Silver could benefit from the same sentiment. "China’s silver demand will grow steadily. Investment demand in particular will catch up, once silver futures are ” said Shi Qinghe, an analyst at Antaike, a state-backed research firm. Shanghai Futures Exchange now trades gold futures, The possibility of silver futures has been. Linder discussion or some time, although the time frame remains unknown.

    It is not just Chinese investors says that see sparkle in silver. Consumers in India, the world’s biggest retail gold market, are developing a taste for the metal too, "Silver is now being taken seriously, most of the goldjewellers are setting up separate counters to sell silver," said Babu Alapatt, president of All Kerala Gold and Silver Merchants Association. "A lot of capacity has been built by manufacturers due to renewed interest."

    lndia’s silver imports in 2010 rose by 20 percent on the year to1,200 tonnes, the Bombay Association (BBA) estimates? BBA expects imports to double this year, as consumers chase cheaper silver jewellery and seek an investment substitute for gold after bullion hit record "Imports of silver are phenomental and growing faster than gold We import about 20-30 tonnes" every month on an all-lndia said Suresh Hundia. promoter and chairman of a large Mumbai-silver trader, Hundia Exports. which produced just 206.95 of silver in 2009, depends overseas market for much of its consumption, 60 to 70 percent of which goes into jewellery and silverware.

    On an inflation-adjusted basis silver would need to rise to over $130 to match the 1980 peak. "We’ll likely see that all the concerns about debt and about what governments are doing to support economic growth through keeping interest rates at low levels and unconventional monetary policy favour gold and favour silver. So we see silver doing well and continuing to make new highs in 2011," said Bhar of Credit Agrieole. But Bhar and other analysts also expressed concerns over silver’s large surplus, saying it could weigh on prices in the longer term, once investment appetite wanes. "The problem with the silver market at the moment is that it is generating a very large surplus." said Lloyd of CRU, adding that ETF holdings could be viewed as stocks that might one day add to the already overly abundant supply. Our assumption is that investment will peak within the next 18 months, and then you can see prices drift. lf people that invested in silver stop buying and selling , prices could fall very rapidly."

Holdings in the iShares Silver, Trust, the vvorld’s largest silver-backed exchange-traded fund, reached a record-high of 10,964.14 tonnes in mid-December, before easing 10,725.73 tonnes by mid-January. The amount is twice the global market surplus, according to CRU u of statistics.

Duties in China and India
     China has been a net importer of silver, unwrought or in semi-manufactured or in powder form, since 2007. China does not impose an import duty on silver, except a 10.5 percent on base metals clad with silver. But a 17 percent value-added tax is levied on silver imports, in comparison to an exemption of VAT on gold imports. China does not impose an export duty on silver,but limits the amount of silver being exported, For 2011, Beijing handed out 5,670 tonnes of quotas, up 11 percent from last year’s.

     India charges 1,500 rupee per kilogram duty on silver imports. There is no duty on silver exports, India silver imports (tonnes):

	2009	1,259.55
	2008	5,047.53
	2007	2,488.00
	2006	699.75
	2005	3,399.23
	(Source: GFMS)

Silver fabrication consumption in different sectors in 2009:
                                                          (million ounces)

	Fabrication total	729.8
	Industrial applications	352.2
	Photography	82.9
	Jewellery	156.6
	Silverware	59.5
	Coins & Medals	78.7

           
Top ten countries in silver fabrication:
                                                          (million ounces)

	United States	164.4
	India	104.3
	China	70.7
	Japan	66.6
	Italy	33.6
	Germany	32.8
	Thailand	30.7
	Belgium	23.2
	UK & Ireland	19.2
	South Korea	18.3