[SMM Analysis] Silver Production Dropped Slightly in December

In December, the production of #1 silver dropped 0.5% MoM and 1.5% YoY. The slight decline in December silver production was mainly due to most companies having largely completed their annual production plans, resulting in stable or slightly reduced output. However, December silver sales saw a significant increase compared to November, with smelters' sales volume far exceeding production. This was primarily because, nearing year-end, smelters cleared out inventories in preparation for annual accounting. Additionally, silver prices showed a downward trend in November but an upward trend in December, coupled with companies beginning to deliver long-term contracts for processing trade exports. These demand factors led to a slight decline in smelters' silver production this month, while silver sales volume increased substantially.

Entering 2025, the overall silver market capacity is expected to remain flat compared to 2024, with the supply of silver ingots also expected to remain stable. The proportion of long-term contracts is anticipated to decrease, with the market primarily driven by spot orders.

In January, due to the approach of the Chinese New Year, the production of some smelters primarily using recycled raw materials is expected to decline, while those using ore as raw material are expected to maintain stable production. Overall production is projected to drop MoM.

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