The industry-funded organisation said strong investment demand and rising jewellery and silverware offtake were responsible for driving the higher demand.

Produced by the GFMS Team at Refinitiv, the report found 20% more demand for silver bars and coins at 212.5Moz, with bar demand jumping 53% on the back of strong sentiment in India, where demand more than doubled.

Silver jewellery demand also moved 4% higher in 2018 to 212.5Moz. India again was the standout, with its demand for jewellery up 16% to a new record level.

Global industrial silver demand contracted 1% year-on-year to 578.6Moz, mainly owing to a dip in silver's use in photovoltaics on account of manufacturer thrifting, which was down 9%.

Global mine supply fell for the third consecutive year, following a continuous streak of 13 annual increases before 2016, the institute said.

Silver output fell 2% in 2018 to 855.7Moz following supply disruptions in Canada, Guatemala and the US.

For the second year, the biggest year-on-year variation was posted by primary silver mines, which decreased by 7% in 2018 to contribute 26% of total mine supply. The lead/zinc sector contributed 38% of by-product silver output, followed by copper at 23% and gold at 12%.

It added silver scrap supplies had been in retreat since 2012 and fell by nearly 2% in 2018.

These factors led to another tightening of the supply-demand balance, contributing to a physical deficit of 29.2Moz in 2018, as opposed to the 34.2Moz suplus recorded for 2017.

The institute said the annual average silver price fell by 7.8% to US$15.71/oz in 2018, with prices trading in a $13.97-17.52/oz range. It cited the stronger US dollar, interest rate hikes, the trade dispute between the US and China, and lower global economic growth projections from the International Monetary Fund as affecting the grey metal's price last year.

Silver traded at $14.87/oz in New York today.