Hedging Sentiment Cools, Squeeze Ends, Silver Premiums Retreat from Highs [SMM Silver Market Weekly Review]

On the macro front, the US and China reached a basic consensus in economic and trade consultations, and with signs of easing in the Russia-Ukraine conflict, market risk appetite warmed rapidly, short-term safe-haven demand declined, and precious metal prices pulled back. Additionally, US stocks and the US dollar rose in tandem. This week, the silver leasing rate in the London market returned to below 5%. As ETFs reduced holdings, India's Diwali demand season ended, and silver ingots flowed into the London market, the extreme short squeeze came to an end. Regarding the US Fed's interest rate cut cycle, although the US Fed cut interest rates by 25 basis points as expected on Thursday, briefly boosting silver prices, Powell's remarks were hawkish. The meeting signaled uncertainty about a December rate cut while outlining a future monetary policy approach of "interest rate cuts + balance sheet expansion." Although the US dollar index rebounded, putting short-term pressure on silver, silver is still expected to benefit in the medium and long-term monetary easing cycle. Silver ingot inventory remains at a historically absolute low. If geopolitical tensions or inflation resurge, a short squeeze could likely start production again.

[Economic Data] Bullish: US September unadjusted CPI YoY actual: 3%, previous: 2.90%, expected: 3.10%
US October University of Michigan Consumer Sentiment Index final actual: 53.6, previous: 55, expected: 55
US EIA crude oil inventories for the week ending Oct 24 actual: -6.858 million barrels, previous: -96.1, expected: -21.1

[Spot Market] In the domestic silver spot market, the tight liquidity situation gradually eased, and spot premiums declined. This week, the price spread between national standard silver ingots and large-factory silver ingots remained relatively small. In Shanghai, supplier premiums against TD fell to 30-45 yuan/kg, or premiums against the Shanghai silver futures SHF2512 contract decreased to 10-20 yuan/kg. In Shenzhen, supplier premiums against the SHF2512 contract were 20 yuan/kg. After silver prices pulled back this week, downstream end-user enthusiasm for buying the dip rebounded, spot market circulating supply increased, and market turnover improved significantly WoW.

PV silver paste: This week, the reference average price for solar cell rear-side silver paste was 7,160-7,307 yuan/kg; the reference average price for solar cell front-side finger was 10,774-10,995 yuan/kg; the reference average price for solar cell front-side busbar was 10,724-10,945 yuan/kg.