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

According to SMM, around the delivery of the SHFE silver 2504 contract in mid-April, silver ingot inventories in Shanghai and Shenzhen experienced varying degrees of decline. Approaching the month-end, domestic social inventories of silver ingots continued to decrease. Spot market supply briefly tightened, and some suppliers halted trading after depleting their inventories in late April.

On one hand, downstream end-use demand remained stable. A trader noted that after the Qingming Festival, the precious metals market plunged, 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 inventories and pre-sold products within the month, leading suppliers to end their monthly trading early as the month-end approached. On the other hand, some smelters in Henan and Shandong mentioned increased export demand in late April, resulting in reduced domestic supply. Additionally, a smelter stated that after shipping spot cargo to Hong Kong earlier this week, their willingness to sell decreased. Large smelters quoted spot silver ingot prices at a TD premium of 6~8, reflecting a reluctance to sell.

Price-wise, according to a Wall Street Journal (WSJ) report on Wednesday, the White House may cut additional import tariffs by about 50%-65%, easing 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." This news theoretically exerts pressure on silver's safe-haven demand. However, improved US-China trade relations could also boost demand for silver as an industrial metal. In the short term, silver prices will be influenced by trade policies, US Fed expectations, and industrial demand, presenting a fluctuating trend.