Remember that the SLV contract states that they can be paid out in FRN's. There is no "Demanding" physical when you are dealing in SLV contracts. They can and will pay in FRN's.
After they receive the FRN's it is then up to the owner of the FRN's to buy physical off the market.
All the big contracts are between the banks, the miners and say SONY. Those contracts will certainly be fulfilled for their contracted price.