[SMM Analysis] Silver: Improved Macro Sentiment vs Poor Fundamentals

I. Market Review
The silver market rebounded slightly in the recent period. According to SMM data, from April 2 to 17, the average price of 1# silver (Ag99.99%) fluctuated upward from 18,230 yuan/kg to 19,483 yuan/kg, following an overall pattern of initial decline followed by recovery.
In mid-April, as the US-Iran ceasefire agreement progressed, precious metal prices rebounded in the short term, buoyed by the improved macro atmosphere, with the SGE Ag(T+D) contract rising over 4% in a single day. Notably, despite the strong rebound in futures prices, spot prices struggled to catch up, and premiums continued to narrow to near parity.
II. Macro Background
The US-Iran ceasefire agreement dominated market sentiment. This week's hot topic centered on the progress of the US-Iran ceasefire agreement, with overall macro sentiment leaning positive. However, as the weekend approached, uncertainties emerged in the ceasefire negotiations, and geopolitical tensions saw no substantive easing. Trump stated that the Iran conflict was about to conclude and threatened to strike Iran's civilian infrastructure; meanwhile, he warned Powell to step down in a timely manner, hoping that his US Fed nominee Warsh would be confirmed soon, claiming that interest rates were expected to decline after his appointment.
US Fed policy expectations grew more complex, capping gains. Although the probability of a US Fed interest rate cut rose slightly this week compared to early April, the market remained cautiously on the sidelines, limiting gains in precious metal prices.
III. Spot Market
Consumption remained weak, and inventory shifted from decline to increase. Despite the recovery in macro sentiment, spot consumption remained persistently weak. As suppliers fulfilled expectations of transferring inventory and shipping to delivery warehouses, social inventory of silver ingots increased notably.
Since mid-April, despite rising silver prices, suppliers generally lowered premiums to sell off holdings. As the weekend approached, mainstream transaction prices for domestic silver ingots in the Shanghai area saw premiums against T+D fall to 0–10 yuan/kg.

IV. Outlook
Geopolitics: The temporary ceasefire agreement is set to expire on April 22. Whether it can be extended or a permanent agreement can be reached will have a significant impact on global market risk appetite.
Supply-demand pattern: The short-term rally driven by capital flows lacked fundamental support. Since mid-April, ETF open interest ended its downward trend and the capital side improved slightly, but pessimistic expectations for the PV industry and ongoing silver substitution solutions continued to suppress downstream silver powder and silver paste procurement demand, while mandatory stockpiling needs of silver nitrate and silver powder/silver paste enterprises declined in April. Industrial demand entered the off-season, and if investment demand remained subdued, the spot oversupply situation would be difficult to change in the short term. Price Outlook: Silver prices are expected to move sideways within the current range, capped by technical resistance levels and weak spot demand on the upside, while supported by recovering macro sentiment on the downside. A breakout from the sideways pattern would require clearer macro signals for direction. Going forward, close attention should be paid to the progress of US-Iran ceasefire negotiations, US Fed policy developments, and changes in spot inventory and sentiment.