Decline in terminal production spreads: How is silver nitrate production expected to perform in June, following a decline in late May? [SMM Analysis]

According to SMM, the performance of downstream consumer orders for silver nitrate enterprises was moderate in early May. However, since mid-May, with the end of the domestic PV installation rush, the operating rate of silver nitrate production has declined amid poor order performance. In May, silver nitrate production fell by 17% MoM. Entering June, with the pessimistic outlook for PV sector orders remaining unchanged, silver nitrate enterprises have no short-term expectations of recovery. Some enterprises still maintain an operating rate of less than 50%, and it is expected that silver nitrate production in June will remain flat or decline slightly compared to May.

In addition, while downstream consumption weakened in May, silver prices hovered at highs. To maintain production and operations, some enterprises reduced the processing fees for silver nitrate to expand the market. However, a few enterprises still expressed their reluctance to compete by cutting processing fees, despite the decline in orders. They have no plans to adjust prices in June and expect to maintain relatively high processing fee quotes of 25-30 yuan/kg. Affected by changes in macro risk appetite, the popularity of precious metals cooled briefly in May, and some enterprises took advantage of low prices to alleviate financial pressure. In June, silver prices have not yet broken out of the volatile range. Silver nitrate enterprises are significantly more concerned about fluctuations in silver prices than changes in processing fees. However, due to the decline in total downstream orders, silver nitrate enterprises have low enthusiasm for stockpiling, and there is a strong wait-and-see sentiment in the market.

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