Silver imports in June surged by 5,329%

In June, the import volume of unrefined silver with a purity of ≥99.99% was 92.3 mt, up 5,329% MoM. The import volume surged in June.

The reason for the sharp increase in silver imports in June is the significant rise in the amount of silver imported under "general trade."

Why did the general trade import volume of silver increase significantly in June? It was due to the change in the price spread between domestic and overseas markets, with domestic silver prices exceeding overseas silver prices (tax included after conversion).

Previously, the price of silver in China was usually lower than the international market, mainly because domestic silver supply exceeded demand, suppressing prices. Since September 2023, the demand from the domestic photovoltaic industry increased significantly, and the consumption of domestically produced silver has also risen, leading to a substantial increase in demand. This has resulted in a continuous decrease in domestic inventory, pushing up domestic silver prices and gradually widening the price gap between the domestic and international silver markets.

There were also individual periods when domestic silver prices were higher than the international market, but the import volume was not large. The reason for the surge in silver imports in June was:

Firstly, the situation where domestic silver prices were higher than international prices in the past might have been limited to a specific moment and lasted for a short time, making it difficult to support large-scale silver ingot imports. Due to rapid price changes, it was challenging to conduct large-scale spot pricing.

Secondly, there are differences in the conventional circulation sizes between foreign silver ingots and domestic silver ingots (foreign ingots are mainly 30 kg large ingots, while domestic ingots are mainly 15 kg small ingots), and there is uncertainty in the market regarding the sales prospects after import. Previous small-scale import were difficult to sell due to frequent changes in the price spread. However, when the basis narrows and there is profit in the market, the spot discounts increase, and the premiums and discounts stimulate the market to purchase large ingots.

In June, due to a longer import window compared to the past, coupled with the domestic off-season in July and August, the market generally expected that the price spread would not remain positive in the long run and would inevitably narrow. Therefore, the positive price spread in June became a rare opportunity, stimulating a large amount of market imports. As the price spread narrowed and market profits increased, the discount on large ingots increased, further stimulating domestic market acceptance and promoting spot sales.

It is extremely rare for the price spread to remain positive and the import window to open, so it is expected that large-scale imports will not last long.