SMM analysis on China June silver output and July forecast

According to the SMM survey, in June, the production of #1 silver was 1,437.614 mt, of which mined silver accounted for 956.614 mt. Compared to May, silver production decreased by 121.719 mt, down 7.8% MoM but up 4.7% YoY.

In June, 10 companies saw an increase in production. There was an increase in the proportion of high-silver ore in the raw materials purchased in April and May. Some companies resumed production after maintenance in May. However, 16 companies experienced a decrease in production, mainly because silver smelters began maintenance in mid-June, with some extending maintenance into July. Therefore, silver production in June-July is expected to further decline. For scrap recycling companies, silver spot transactions were not active from mid to late May. There was some improvement in early to mid-June, with the widening basis in the third week increasing market willingness to purchase. Nevertheless, the cash flow pressure from H1 earnings results at the end of June led companies to sell spot silver to raise funds, resulting in an oversupply in the market and putting pressure on spot silver prices. Additionally, the high silver prices in June increased the financial pressure on recycling companies, causing them to reduce their purchase volumes to maintain cash flow stability.

The overall silver price in 2024 still has a competitive advantage compared to 2023. Although June and July are typically maintenance periods for silver companies, many smelters chose to reduce maintenance time and increase production due to high prices this year. As a result, June silver production increased YoY.