[SMM Silver Analysis] SMM #1 Silver Output Rises 0.5% MoM in Aug, Cumulative Production Up 4.7% YoY

In August 2026, SMM #1 silver production was 1,564 mt, up 0.5% MoM; cumulative production in January-August was 12,963 mt, up 4.7% YoY.

Silver production remained low in August, mainly due to ongoing maintenance at lead-zinc smelters, though production resumptions at some enterprises drove a slight rebound. This year's production has continued to grow YoY, driven by three factors: first, high silver prices stimulated some lead-zinc smelters to add precious metals recycling lines; second, smelter precious metals capacity was released mainly in H1, while copper smelter recycling volume declined in the same period last year; third, large volumes of imported overseas ingots flowed in during Q1, with some processed by smelters into smaller ingots.

On the PV front, silver nitrate production in August was 631 mt, down 2.32% MoM; cumulative production in January-August was 5,025 mt, down 18% YoY. Silver nitrate production and sales are expected to shrink sharply for the full year, especially after the completion of India export rush orders in June, with production declining notably in July-August. Based on solar cell production schedule expectations, September production may be on par with August, and PV demand has yet to show signs of recovery.

In the spot market, silver ingot premiums remained at a discount of 10 yuan/kg to TD to parity in August, with warrants at SHFE and the gold exchange continuing to build up. Weak consumption was mainly suppressed by three factors: persistently weakening PV industrial demand, traditional sectors such as electrical alloys being in the off-season, and the roughly 14% rise in silver prices in August dampening downstream purchase willingness. At the trader level, the spot-futures price spread continued to widen in the first half of August, with traders showing low willingness to sell and warrants continuing to accumulate; in August, the domestic-overseas price ratio opened the import window, processing trade exports declined, smelter domestic trade selling pushed premiums lower, and after the import window opened, persistent arbitrage operations further exacerbated domestic inventory buildup. Entering September, traditional consumption is expected to recover modestly, but under the current supply-demand pattern, market premiums are unlikely to see wild swings.