Kitco News) -The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million used in 2010, according to a report from the Silver Institute released Monday.

The report, The Future of Silver Industrial Demand, was produced on behalf of the Silver Institute by the precious metals consultancy GFMS Ltd. Industrial use of silver accounts the largest share of annual fabrication demand, the Silver Institute said.

The “base case” forecast from GFMS is predicated on what the consultancy sees as the most likely outcome for the global economy, the consultancy said.

“The report demonstrates how buoyant silver industrial demand is, not only because of the lack of substitution, but also because of the wide range of established and growing new uses that make up industrial demand,” said Michael DiRienzo, executive director of the Silver Institute. “This report maintains that we expect to see robust gains in industrial silver demand over the next five years, further emphasizing silver’s essential role in industry.”

The report identifies 11 still-new applications for silver, ranging from food packaging to radio identification tags to auto catalysts, which collectively could exceed 40 million ounces of industrial demand by 2015, said the Silver Institute.

The report also said that stronger silver industrial demand in the U.S. and Asia will be a key factor driving growth through 2015, with healthy developing-country demand especially in markets such as China and India.

Much of the forecast growth will come from established applications, such as silver’s use in electrical contacts and in the photo-voltaic market, the report said. The “technical proficiency of silver” limits the ability to switch in favor of lower-cost alternatives, making the metal largely price inelastic, the Silver Institute said.

The report recounted steady growth in industrial demand for silver for two decades now, interrupted only briefly by financial-market weakness in 2001 and 2008. Back in 1990, this demand stood at 273 million ounces, meaning it has already grown by 78% to 2010.

“Although it is important not to overlook the contribution from ‘new’ industrial uses of silver, it is also apparent that much of the growth in the global total will be driven by stronger demand for a number of established uses…,” the report said.

In particular, the GFMS report cited “electrical contacts,” such as in automobiles. This use has risen both due to an increasing number of cars around the world, as well as expanding end uses for contacts, from controlling windshield wipers and seat adjustments to managing navigation systems. The report also cited development of the photo voltaic industry, such as solar energy.

PV use of the white metal was developed over two decades ago, but until recently, silver offtake remained slight, the report said.

“The market for PVs then changed dramatically, as growing environmental concerns increasingly focused on generating power from fossil-free sources,” said the report. Such silver offtake soared from around 3 million ounces in 2004 to around 50 million ounces in 2010, said the report. “Further robust growth is also forecast for the PV industry, with silver demand in 2015 expected to more than double the already elevated total for 2010,” the report from GFMS said.

By Allen Sykora of Kitco News; asykora@kitco.com