China's Silver Imports Hit Record High, Driven by Retail and PV Demand

China's March silver imports hit a record high, as retail investors' buying frenzy and concentrated stockpiling by the PV industry jointly pushed imports far above seasonal averages. Analysts warned that this explosive growth is unlikely to sustain.

According to China's customs data, China imported approximately 836 mt of silver in March, nearly triple the past 10-year March average of approximately 306 mt.

This import surge was driven by two overlapping demand forces: retail investors purchasing small-sized silver bars as substitutes for high-priced gold, and PV manufacturers rushing to stockpile ahead of the April 1 export tax rebate cancellation.

China's silver prices were significantly higher than international benchmark prices driven by robust demand, prompting traders worldwide to ship silver to China for arbitrage, with Hong Kong serving as the primary transit channel.

Explosive Imports Unlikely to Sustain

However, import momentum already faced multiple cooling factors.

Retail side, gold and silver prices retreated from highs set in January. The energy crisis triggered by the Iran war intensified market concerns over inflation, dragging down the performance of zero-yield precious metals, and the momentum of retail bandwagon buying also weakened accordingly.

Industrial side, the PV industry consumed approximately one-fifth of global annual supply, with capacity highly concentrated in China. However, this demand pillar was also under pressure, as policy statements signaled curbing overcapacity in the PV industry.

Meanwhile, silver prices remained at a relatively high level, potentially prompting the industry to shift toward cheaper base metals as substitutes for silver.

Wu Zijie, an analyst at Shenzhen Jinrui Futures, stated that "explosive imports will certainly not continue," and future import flows will return to normal levels. He noted that given China is the world's largest silver producer, there is no basis for long-term imbalance in silver supply and demand.