The silver market opened higher with a gap after the holiday, with macro bullish factors intertwined with weakening demand [SMM Weekly Review of Silver Market]

Early this week, the US ISM Manufacturing PMI unexpectedly fell, reigniting calls for the US Fed to cut interest rates. Trade tensions escalated again as Trump announced an increase in tariffs on imported steel and aluminum to 50%, effective from June 4. Additionally, geopolitical conflicts intensified. Although substantive negotiations on the Russia-Ukraine situation were underway, localized conflicts escalated. In the Middle East, despite ongoing US-Iran talks, progress was slow with significant differences remaining. Multiple favourable macro front factors boosted safe-haven assets such as precious metals. Silver prices opened higher with a gap after the holiday and fluctuated at highs.

[Economic Data]

Bullish Factors:

US ISM Manufacturing PMI for May: 48.5 (previous: 48.7, expected: 49.5)

US ADP Employment Change for May: 37,000 (previous: 60,000, expected: 110,000)

US EIA Crude Oil Inventories for the week ending May 30: -4.304 million barrels (previous: -2.795 million barrels, expected: -1.035 million barrels)

[Spot Market]

Silver: This week, silver prices opened higher and consolidated amidst macro bullish sentiment. However, as the operating rate of silver nitrate production declined, demand for spot silver contracted. Towards the end of the week, there were signs of a decrease in spot premiums. Downstream players were generally cautious, waiting for clearer trends in silver prices before making procurement and inventory decisions. After the Dragon Boat Festival, the enthusiasm for downstream purchases significantly declined. Mid-week, the spot-futures price spread between TD and SHFE silver front-month contracts widened, leading to an increase in delivery demand at some trading locations. Market transactions were mainly among traders. Towards the end of the week, the premium for tonne-grade national standard spot silver ingots for self pick-up in the Shanghai area against TD silver decreased to a quoted range of 3-4 yuan/kg or a discount of 5-8 yuan/kg against the SHFE silver 2506 contract. After negotiations, some suppliers lowered their premiums, resulting in a small volume of transactions. In the Shenzhen area, national standard spot silver ingots were traded at a discount of 25 yuan/kg against the SHFE silver 2508 contract. Downstream players still primarily focused on cargo pick-up under long-term contracts, with only a small volume of just-in-time procurement and a strong wait-and-see sentiment.

PV: This week, the reference average price of solar cell rear-side silver paste ranged from 5,352 to 5,518 yuan/kg; the reference average price of solar cell front-side fingers ranged from 8,063 to 8,312 yuan/kg; and the reference average price of solar cell front-side busbars ranged from 8,013 to 8,262 yuan/kg.

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