Domestic spot silver supply is slightly tight, and social inventory continues to decline [SMM Analysis]

According to SMM, around mid-April, before and after the delivery of the SHFE silver 2504 contract, silver ingot inventories in Shanghai and Shenzhen began to decline to varying degrees. By the end of April, the domestic social inventory of silver ingots continued its downward trend. Spot market supply briefly tightened, and some suppliers halted trading after depleting their inventories in late April.

On one hand, downstream end-user demand for essential orders remained moderate. A trader noted that after the Qingming Festival, precious metals opened lower, with silver prices falling below 8,000 yuan/mt that week, prompting active inquiries and advance payments from downstream buyers. Some smelters quickly cleared their spot inventories for the month and engaged in advance presales, leading suppliers to end monthly transactions early as the month-end approached. On the other hand, in late April, some smelters in Henan and Shandong mentioned an increase in export demand, leading to a reduction in domestic supply. Another smelter noted that after shipping spot cargo to Hong Kong earlier in the week, their willingness to sell decreased, with their large-scale silver ingot spot TD premiums quoted at a high +6~+8, reflecting reluctance to sell.

On the price front, a report by The Wall Street Journal (WSJ) on Wednesday indicated that the White House might reduce additional import tariffs by approximately 50%-65%. Positive comments from Washington alleviated concerns about global economic turbulence. Meanwhile, a spokesperson for China's Ministry of Commerce stated that if the US wishes to engage in trade negotiations, it must "completely remove all unilateral tariff measures." Theoretically, this situation could pressure silver's safe-haven demand. However, improvements in US-China trade relations also increased demand for silver as an industrial metal. In the short term, silver prices may still be influenced by trade policies, US Fed expectations, and industrial demand, showing a fluctuating trend.

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