The European Central Bank Cut Interest Rates by 25 Basis Points, Boosting Silver Prices [SMM Analysis]

Last week, the European Central Bank announced a 25 basis point cut, which boosted silver prices starting from the night session on Thursday. At the beginning of the week, silver prices began to climb from a low point. Last week, the ex-factory reference average price for SMM1# silver in the morning was 6,931-7,344 yuan per kilogram.

[Economic Data]:

Bullish: The US seasonally adjusted CPI year-on-year rate for the end of August was 2.5%, lower than the previous value of 2.9% and the expected value of 2.6%. The US EIA crude oil inventory for the week ending September 6 was 833,000 barrels, higher than the previous value of -6.873 million barrels and lower than the expected value of 987,000 barrels.

Neutral: The US seasonally adjusted CPI month-on-month rate for August was 0.2%, consistent with the previous value and the expected value. The initial jobless claims for the week ending September 7 in the US were 230,000, higher than the previous value of 228,000 and in line with the expected value. The European Central Bank cut interest rates by 25 basis points on September 12, in line with market expectations.

Last week, multiple data points were bullish, and the market was divided on whether the US Fed would cut interest rates by 25 basis points or 50 basis points this week.

[Spot Market]:

Silver: Last week, silver ingot prices were relatively stable. At the beginning of the week, due to low silver prices and the upcoming Mid-Autumn Festival holiday at the end of the week, the market engaged in significant bottom-fishing purchases. The market saw bulk stocking, and due to the low prices, smelters were reluctant to sell, leading to a brief buying frenzy and a supply shortage, which pushed up spot premiums/discounts. As prices rose, market enthusiasm for purchasing declined. Since silver ingot transportation takes time, purchases made mid-week or on Friday would only be delivered after the Mid-Autumn Festival, resulting in relatively more warehouse warrant purchases on Thursday and Friday.

Downstream: The market saw low-price purchases but remained relatively stable. Despite the stocking demand for the Mid-Autumn Festival and National Day holidays, regular stocking demand remained stable. Although the non-photovoltaic industry entered the traditional September-October peak season, the high silver prices limited market demand stimulation, and orders remained relatively stable.