Solar manufacturers are swapping costly silver paste for copper alloys to escape silver's price swings and multi-year shortfall. But because most silver is mined as a byproduct of copper and other base metals, the substitution moves the industry one link along the same constrained supply chain rather than breaking free of it.
Solar panel makers cannot escape silver's supply squeeze by switching to copper, because the two metals are locked to the same mining chain. High-efficiency panel makers are replacing silver paste with copper-based alloys to insulate themselves against a metal prone to sharp swings, yet copper supply is already strained. That leaves anyone trading silver watching a shortfall that a technology shift cannot quickly fix.
Silver's spot price has cooled sharply, down over 50% from its all-time high of $121.64 per ounce to around $58 per ounce. Manufacturers, though, worry less about the current price than about a multi-year supply shortfall. The selloff is clearest in the iShares Silver Trust ETF, which is down about 20% year-to-date even as physical inventories tighten.
Why the copper pivot hits a wall
China's largest solar manufacturer, Longi Green Energy, has started production at a 21-gigawatt back-contact cell line in Shaanxi, using an alloy contact system to replace conventional silver paste. Longi says the new cells have reached 27.6% conversion efficiency, certified by Germany's Institute for Solar Energy Research Hamelin.
But copper offers no clean exit. The metal hit an all-time high of $6.67 per pound in June before easing to around $6.32, and its supply is struggling even without the extra demand from substitution. Chile's Codelco, the largest producer, saw output fall 18.3% year-on-year to 106,300 tons in May.
The closed-loop trap
The two metals are bound together at the source. Because about 70% of silver is mined as a byproduct of copper, lead, zinc, and gold, silver mine supply cannot simply respond to higher prices. Constrained copper output therefore drags down byproduct silver, so the pivot cannot independently escape the squeeze it was meant to solve.
The evidence of that squeeze is already on the books. COMEX registered silver holdings have fallen more than 75% from their 2020 peak to 79.9 million ounces. According to Reuters, the Silver Institute projects a sixth consecutive annual deficit of 46.3 million ounces in 2026, with a cumulative shortfall since 2021 of roughly 762 million ounces.
Solar silver demand is forecast to fall 19% in 2026 to about 151 million ounces as copper metallization spreads. Trading silver for copper does not sever solar's tie to constrained mining; it simply moves the industry one link along the same chain.
Source: Benzinga
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