Silver ETF Open Interest Surge Aggravates Liquidity Tightness, Year-End Investment Demand Dominates Spot Silver Trading [SMM Silver Market Weekly Review]

From a macro perspective, market expectations for the US Fed to cut interest rates in 2026 further strengthened, with a general consensus now anticipating two possible rate cuts next year. The persistently loose global liquidity environment has set the tone for precious metals to hold up well. Geopolitically, events such as the escalation of US oil blockade actions against Venezuela and Ukraine's first attack on a Russian oil tanker in the Mediterranean have, in the short term, enhanced the safe-haven attributes of precious metals. Recent COMEX delivery pressures have triggered a risk of a squeeze, while global investment vehicles like silver ETFs continue to lock up physical inventory. The sharply increased open interest in the short term is further eroding market liquidity. The rapid climb in silver prices includes a significant amount of speculative positions; however, as bullish factors are gradually digested by the market and funds take profits and exit, traders need to be alert to price adjustments triggered by shifts in market sentiment. Although silver prices are expected to maintain a bullish trend in the medium to long term, short-term caution is still warranted against the risk of a pullback from high levels.

[Economic Data]

Bullish:
The final US Michigan Consumer Sentiment Index for December was 52.9 (previous: 53.3, expected: 53.4).
US initial jobless claims for the week ending December 20 were 214,000 (previous: 224,000, expected: 224,000).
Bearish:
US API crude oil inventories for the week ending December 19 increased by 2.391 million barrels (previous: -9.322 million barrels).

[Spot Market]

In the domestic silver spot market, silver prices rose sharply this week, while trading activity noticeably slowed as the year-end approached. During the week, the spot market was buoyed by investment demand, with some suppliers executing small volumes at high premiums. At the start of the week, mainstream quotations for national standard silver ingots in the Shanghai market were quoted and traded at slight discounts against TD. By the weekend, spot premiums in the Shenzhen area surged significantly. After the spot-futures price spread narrowed and inverted, suppliers in Shanghai raised their premiums and discounts quotations to premiums of 10-20 yuan/kg against TD. In Shenzhen, investment demand emerged, resulting in small-volume trades at high premiums of 50-100 yuan/kg against TD. However, it is understood that market quotations still varied widely. With year-end closing and inventory counting overlapping with the sharp rise in silver prices, industrial end-use consumption nearly stalled, and a strong wait-and-see sentiment prevailed in the market. Downstream end-users remained wary of high prices, with actual transactions dominated by investment demand, and overall spot trading was relatively weak.

PV silver paste: This week, the reference average price for solar cell rear-side silver paste was 9,568-10,947 yuan/kg; for solar cell front-side finger, it was 14,386-16,456 yuan/kg; and for solar cell front-side busbar, it was 14,336-16,406 yuan/kg.