The disappointing non-farm payrolls data ignites expectations of an interest rate cut, with silver prices on a four-day winning streak returning to an upward trend [SMM Weekly Review]

This week, silver prices stopped falling and rebounded, rising for four consecutive days, driven by macro tailwinds. The non-farm payrolls data released last Friday and its downward revision of prior data raised concerns about a US economic slowdown, significantly increasing expectations for an interest rate cut in September. Additionally, news of Trump pressuring the US Fed and personnel changes led to a pullback in the US dollar and Treasury bonds, further boosting silver prices. In contrast, gold continued to fluctuate at highs in the absence of more positive signals. On trade tariffs, Trump announced a 25% tariff hike on imports from India and imposed approximately 100% tariffs on chips and semiconductors (exempt if manufactured in the US). Market risk-off sentiment was reignited, providing short-term support for silver prices. However, from a medium and long-term perspective, attention remains on whether these tariff measures will negatively impact end-use consumption demand for semiconductors and chips.

[Economic Data]

Bullish: US EIA crude oil inventories for the week ending August 1 fell by 3.029 million barrels (prior: 7.698 million, expected: -591,000); US seasonally adjusted non-farm payrolls for July rose by 73,000 (prior: 14,000, expected: 110,000); US ISM Manufacturing PMI for July came in at 48 (prior: 49, expected: 49.5).

Bearish: Eurozone Services PMI final reading for July was 51 (prior: 51.2, expected: 51.2).

[Spot Market] In the silver spot market, after prices stopped falling and rebounded, just-in-time procurement by downstream users was moderate at the start of the week. However, as the spot-futures price spread between the most-traded SHFE silver 2510 contract and SGE TD widened to 30-33 yuan/kg, suppliers became reluctant to sell, leading to higher premiums for SGE TD in the spot market. Meanwhile, the high premiums dampened purchase willingness among downstream end-users, resulting in a strong wait-and-see sentiment. In Shanghai, premiums for spot national standard silver ingots against SGE TD were quoted at 4-6 yuan/kg, while some traders adopted discounts of 22-24 yuan/kg against the SHFE silver 2510 contract to hold back sales. Many suppliers indicated limited interest in selling unless the spread narrows significantly. Additionally, despite the upward trend in silver prices, downstream buyers only made small just-in-time procurements, with overall inquiry and purchase activity remaining sluggish, leaving the spot market trading sluggish.

PV: This week, the average reference price for solar cell rear-side silver paste ranged from 5,770-5,955 yuan/kg; solar cell front-side finger averaged 8,689-8,967 yuan/kg; solar cell front-side busbar averaged 8,639-8,917 yuan/kg.