The Squeeze Has Not Ended, Silver Spot Premiums Soar [SMM Silver Market Weekly Review]

On the macro front, Sino-US trade friction has not worsened since its escalation, but there is no expectation of easing in the short term, leading to a strong risk-averse sentiment in the market. Traders are waiting for the possibility of Sino-US negotiations at the end of October. A US Fed governor stated that recent Sino-US trade tensions have increased the uncertainty of the US economic growth outlook, and it is realistic to expect two more interest rate cuts this year. In the rare silver market squeeze, bears were forced to "charter flights to airlift silver bars across the Atlantic" for delivery, with Comex seeing the largest single-day pickup volume in four years. Although ETF reductions or New York-London arbitrage logistics returning may temporarily ease London's liquidity tightness, the process, involving shipping costs and brand recognition, takes at least 2-3 weeks, making it difficult to reverse the short squeeze in the short term.

[Economic Data]

Bullish: The preliminary value of the US one-year inflation rate expectation for October was announced as 4.6%, with the previous value being 4.70% and the expectation at 4.7%.

Bearish: The US New York Fed Manufacturing Index for October was announced as 10.7, with the previous value at -8.7 and the expectation at -1.4 

[Spot Market] In the domestic silver spot market, supply continues to be mainly driven by export demand, with the squeeze situation spreading to the domestic market. After a significant decline in supplier inventory, spot premiums abnormally rose, with market consumption primarily consisting of just-in-time procurement of large factory silver ingots. At the beginning of the week, silver ingots were hard to come by in Shenzhen, with suppliers' TD premium on silver ingots first rising to 20-30 yuan/kg. In Shanghai, suppliers maintained a TD premium of 8-10 yuan/kg on silver ingots, with some silver ingots flowing from the Shanghai market to Shenzhen. Approaching the weekend, liquidity in the domestic spot market tightened, with the TD premium on large factory silver ingots in Shanghai significantly increasing to 30-35 yuan/kg, and the TD premium on national standard silver ingots reaching 30 yuan/kg. According to SMM, the production of some silver nitrate enterprises has declined due to issues with silver ingot raw material supply, while downstream end-users are only engaging in just-in-time procurement, with a strong wait-and-see sentiment in the market.

PV Silver Paste: This week, the reference average price for solar cell rear-side silver paste was 7,067-7,751 yuan/kg; the reference average price for solar cell front-side finger was 10,634-11,662 yuan/kg; and the reference average price for solar cell front-side busbar was 10,584-11,612 yuan/kg.