October Silver-Related Product Exports Boosted, Imports Suppressed [SMM Analysis]

SMM, Nov 25: In October, silver ingot exports rose slightly by 1.9%, while imports fell 28.3% MoM; silver nitrate imports decreased 43.9% MoM; silver powder imports dropped 32% MoM, and exports increased 89.3% MoM. In October, exports of unwrought silver with a purity of ≥99.99% amounted to 369.7 mt, up 1.87% MoM; exports of semi-manufactured silver with a purity of ≥99.99% were 0.2 mt; imports of unwrought silver with a purity of ≥99.99% were 2.5 mt, down 26.5% MoM; imports of semi-manufactured silver with a purity of ≥99.99% were 0.8 mt, down 33.33% MoM.

In October, silver nitrate imports were 89.634 kg, down 43.86% MoM; exports were 0. Imports of flake silver powder with an average particle size of <10 microns were 4.1 mt, down 59% MoM; imports of non-flake silver powder with an average particle size of <3 microns were 19 mt, down 80% MoM; imports of other non-flake silver powder were 177.6 mt, down 10% MoM.

In October, import volumes were slightly suppressed, while export volumes were relatively better. The main reason was that the domestic silver price increase in October was smaller than that abroad, narrowing the price spread between domestic and foreign tax-free silver, thus slightly boosting foreign demand for domestic silver ingots. However, the change in the price spread was not conducive to imports, hence the suppression of import volumes.

The reasons for the narrowing price spread between domestic and foreign tax-free silver in October were: 1. In October, the absolute price of silver rose sharply in the middle and late months, stimulating an increase in smelter production, with production up 5.8% MoM. As year-end approached, raw material companies adjusted their inventories, and recycling companies sold raw materials purchased at low prices in early October and before. Additionally, companies did not halt production during the National Day holiday, maintaining normal production. 2. Downstream companies were on holiday during the National Day, resulting in only three weeks of production in October, limiting demand. Coupled with the mid-to-late October silver price increase, all sectors were engaged in destocking, further weakening silver demand. 3. Spot premiums/discounts continued to show discounts, leading to an inventory buildup of silver. Therefore, the domestic silver price increase was less than that abroad, narrowing the price spread.

The significant MoM decline in silver powder imports in October was mainly due to market stockpiling in September. Given the longer transportation time for imported powder and the relatively advantageous silver prices in September, the market engaged in substantial stockpiling in September. However, entering October, due to the need to control inventory, the market sold off inventory, suppressing procurement demand.