Silver Prices Rise Steadily on Strong Economic Data

SHANGHAI, Jan 17 (SMM) - After several important economic data were released last week, silver prices finally rose sharply on January 17. 

Macroeconomic environment

Bullish factors: The US monthly rate of CPI for December after seasonal adjustment was released at -0.1%, lower than the previous print of 0.1% and forecast of 0%. The US one-year ahead inflation expectations stood at 4% in January, lower than the previous print of 4.4% and forecast of 4.3%.

Bearish factors: The weekly EIA crude oil inventory in the United States rose by 18.96 million barrels for the week ended January 6, higher than the previous value of 1.69 million barrels and the estimate of -2.24 million. The US initial jobless claims increased from the previous value of 204,000 to 205,000 in the week ended January 7, which was lower than the forecast of 215,000.

The annual rate of the seasonally adjusted CPI in the United States at the end of December came in at 6.5%, lower than the previous print of 7.1% and in line with the estimate. The economic data showed that the inflation was cooling down, which enhanced the market expectations for a slowdown in Fed's rate hikes. The depressed US dollar index boosted the silver prices. 

Spot market

Last week, most companies began to clear their inventory as they were gearing up for the CNY holiday. The market transactions thinned, and most companies carried out production according to orders on hand and production plans.

Silver: Last week, most traders began to clear their inventory or deliver the cargoes to the warehouses in order to reduce the stocks they held on hand. With the CNY holiday approaching, the trades have been slack since last week. Most traders took holidays, and downstream enterprises already stocked in advance. As a result, the transactions between smelters and manufacturers weakened.

Silver nitrate: Generally, most domestic silver nitrate manufacturers produce and stockpile based on rigid demand. SMM survey shows that some manufacturers planned to maintain production during the CNY holiday, and others who will be closed were busy with production and restocking for the orders to be delivered after the holiday. 

Silver powder and silver paste: Some manufacturers decided to have shorter CNY holidays in order to deliver orders as scheduled.

Electrical contact: Some enterprises, who have completed stocking up raw materials and making shipments last week, were now closed. Others might continue to produce following the production schedules before taking holidays. 

The trades in the silver market were lacklustre last week with the imminent Chinese New Year. This week, the transactions were even scarce as downstream enterprises already stocked up raw materials while some producers focused on production on upcoming CNY holiday.