Interest Rate Cut Expectations and Geopolitical Conflicts Drive Silver Prices Higher, Spot Cargo Transactions Recover After Pulling Back from Highs [SMM Weekly Review] [SMM Silver Market Weekly Review]

On the macro front, expectations for US Fed interest rate cuts heated up, and unexpected events such as escalating tensions in the Middle East boosted gold prices to break through the sideways movement and rise. Silver surged significantly in this atmosphere, and after gold and silver prices broke through key technical levels, they pulled back for consolidation. As Fed Chairman Powell stated in his speech on Wednesday evening that the day's interest rate cut was a risk management decision and there was no need for rapid adjustments to interest rates, market sentiment cooled.

[Economic Data]

Negative: US seasonally adjusted CPI MoM for August actual: 0.4%, previous: 0.20%, forecast: 0.30%

Positive: US EIA crude oil inventory for the week ending September 12 actual: -9.285 million barrels, previous: 3.939 million barrels, forecast: -857,000 barrels

[Spot Market] In the silver spot market, downstream buyers were cautious and hesitant to purchase at the beginning of the week amid the sharp rise in silver prices, while some smelters reduced domestic supply due to processing trade export order demand. At the start of the week, both supply and demand in the spot market declined. Except for a few speculators selling at high discounts, most suppliers held back from selling due to hedging costs and other reasons, adopting a wait-and-see approach. Regarding spot premiums/discounts, the premium for national standard silver ingot warrants in Shanghai against TD was raised to 2-5 yuan/kg, or a discount of 15-18 yuan/kg against the SHFE silver 2510 contract. On Thursday, silver prices pulled back and closed, and downstream end-user procurement and pricing gradually became active, with transactions generally conducted at premiums. Compared to the Shanghai market, consumption in Shenzhen was relatively sluggish, with suppliers offering discounts of 20 yuan/kg against the SHFE silver 2510 contract. This week, spot market circulation sources were relatively tight. With silver prices at historically absolute highs, market wait-and-see sentiment was strong, and downstream buyers made just-in-time procurement. After the silver price pullback, end-user stockpiling ahead of the holiday is expected to increase next week.

PV silver paste: This week, the reference average price for solar cell rear-side silver paste was 6,355-6,518 yuan/kg; for solar cell front-side finger, it was 9,566-9,812 yuan/kg; and for solar cell front-side busbar, it was 9,516-9,762 yuan/kg.