Why Smelters Are Competing for Crude Silver at "Inverted Silver Prices" A Brief Analysis of the Current Crude Silver RC [SMM Analysis]

According to SMM, amid the significant surge in precious metals in 2025, the silver recycling market has seen a sharp rise in activity, with instances of inverted silver prices leading to a rush for crude silver in the market.

In previous years, the RC for crude silver remained stable and unchanged, often described as "steady as still water." However, against the backdrop of an expanding supply-demand gap for silver ingots, overheated speculative attributes, and soaring returns from minor by-products such as gold, platinum, and palladium, it has begun to fluctuate. Quotations for crude silver RC in the market have shown widening disparities, with many market traders purchasing Ag99 crude silver materials at prices inverted against the national standard silver ingot quotes (i.e., at a slight premium to TD). Behind this lies the intention to hoard raw materials in pursuit of speculative gains from rising silver prices and the contained minor metals like gold, platinum, and palladium, leading to offers of lower RC.

Sources of Crude Silver and Industry Practices

Unlike the three grades of national standard silver ingots, crude silver lacks a clear and unified standard. The industry standard "YS/T 1326-2019 Crude Silver" only specifies three different types: Ag80, Ag95, and Ag98. Some market traders also refer to 2# silver (Ag99.95) and 3# silver (Ag99.90) as crude silver and quote corresponding RC (discounts) for trading. The market does not strictly define the source of crude silver as either mined silver or wet-process/pyrometallurgical recycled silver materials. Its appearance can vary from powdered to flake or lump forms. Before processing, various types of materials are blended and remelted into plates. Apart from crude silver enriched from mined silver, materials such as jewelry, alloys, and paste wiping cloths, when enriched to Ag80 or above, can enter the market for trading. However, toll processing of electrolytic silver or procurement of recycled raw materials typically focuses on crude silver materials with Ag97 or higher. Some manufacturers' production lines only accept crude silver materials ranging from Ag98 to Ag99.95. A few manufacturers occasionally recycle Ag80 to Ag95 materials but emphasize the need to evaluate impurity types and content, which may affect recovery rates. The type of impurities and the recovery rate of enriched metals have a greater impact on RC for low-grade silver materials.

It is understood that almost all refined silver smelters in the market possess the production capacity to process or toll-process crude silver with Ag98 or higher. However, not all smelters participate in trading crude silver raw materials. On one hand, the traditional market for crude silver is small and stable. Manufacturers with steady exports of mined and smelted crude silver typically lock in annual business through long-term contracts with fixed buyers, and these enterprises have no intention of expanding their customer base or engaging in spot order trading. On the other hand, although smelters can process silver materials of various grades to meet the quality of national standard 1# silver, their capabilities for recovering other enriched metals vary significantly. Therefore, when the recovery benefits of other enriched metals cannot offset the losses from silver processing, they may forgo transactions. Market Quotations
Regarding the RC for Ag99.5/Ag99.90/Ag98
In the past, the RC for 2# silver (Ag99.95%) at 15 yuan/kg and for 3# silver (Ag99.90%) at 30 yuan/kg remained almost unchanged throughout the year, and sometimes the RCfor Ag98 was no different from that of 3# silver. However, with the expansion of the silver demand gap and the macro-driven precious metals bull market, the RC for crude silver began to decline. By September, the mainstream market quotation for Ag98 RC had fallen to 18-25 yuan/kg, while the RC for 3# silver narrowed to 15-18 yuan/kg. A toll processing manufacturer of crude silver stated that although their external quotation for toll processing of Ag97-Ag99 is 30 yuan/kg, if the volume is large or comes from a stable trading major client, the actual negotiation price is usually reduced by 5-8 yuan/kg, but there is no room for negotiation on RC reduction for very small volumes or partners yet to establish trust.

Moreover, the RC for crude silver materials containing small amounts of gold and platinum have declined even more significantly. This is mainly because in previous years' trading practices, the prices of rich metals did not attract much interest from sellers in terms of pricing, but this year, the impact of rich metals on RC has started to show. It is understood that some market traders have chosen to lower the starting point for gold-rich silver pricing from 50g/mt to 25g/mt and reduce the minus on gold pricing, while others have opted to decrease the RC by 10-15 yuan/kg based on the mainstream silver RC, thus quoting an inverted price for 1# silver (Ag99.99%). Additionally, the richness of platinum and palladium also affects the value of crude silver, but due to the lesser increase and expectations compared to gold, there has been no significant adjustment in the starting point and coefficient.