Domestic Silver Output May Increase in June under the Stimulation of Macro News

SHANGHAI, Jun 9(SMM) -

According to SMM survey, domestic 1# silver output stood at 1,200.53 mt (including 1,035.53 mt of mineral silver) in May 2022, down 3.93% on the month, mainly because many producers carried out maintenance in May.

On the macro front, the data on the implementation of the 33 measures of the State Council meeting shows that a large number of direct stimulus plans have added up to more than 10 trillion. Coupled with the leveraged funds such as interest rate cuts and RRR cuts, it can be described as an unprecedented economic stimulus plan. The changes in the silver which priced in Chinese yuan and even gold have gradually become clearer.

Recently, the minutes of the latest Fed meeting were released, which said that it may be appropriate to raise interest rates by 50 basis points in the next two meetings. More importantly, the minutes also hinted that the accelerated withdrawal of supportive monetary policy will provide flexibility for the Fed's policy later this year. Some analysts believe that the Fed is suggesting that it will stop or postpone raising interest rates to stabilise the economy. This information brings a glimmer of light to the future gold and silver prices.

In addition, Ukraine said that it will reverse the conflict by the end of the year, and the Russian Defense Minister said that they will continue to act until all goals are achieved. It is expected that silver prices will continue to move rangebound in June with potential upward trend under the stimulation of a large number of macro news, especially after the implementation of Fed's interest rate hike, which may boost the silver prices. 

In terms of the changes in the production of manufacturers in May, the number of manufacturers with increased output was less than those with decreased output. Among them, companies with significantly decreased output this month include Guangdong Gold Industry, Chifeng Yunnan Copper, Zhongyuan Gold, Guiyan Platinum, Chihong Zn & Ge, Wanyang Smelting and Guiyang Yinxing, etc.

Enterprises with increased output include Xing'an Silver Lead, Baiyin Nonferrous Metals, Zhongtiaoshan Nonferrous Metals, Yunnan Zhenxing Industry, Zhejiang Hongda, Yunnan Copper and other manufacturers. The increased output was limited, so the overall domestic silver output in May still declined.

It is expected that domestic silver output may increase in June.

Notes:

SMM has released Chinese silver output since February 2021.

Silver is mostly associated with copper-lead-zinc mines. Thanks to the high coverage rate of SMM base metals, SMM surveys 45 silver producers in 17 provinces with a total sample production capacity of 24,000 mt and a total production capacity coverage rate of over 95%.