Silver prices dropped from highs, and downstream market finally saw a price reduction. [SMM Analysis]

Last week, the silver market was turbulent. After reaching a high on July 17, prices quickly fell. The lowest price for SMM1# silver on July 19 was 7,690 yuan per kilogram, while the highest price on July 17 was 8,182 yuan per kilogram. On July 17, positive market sentiment boosted gold prices, driving silver prices up, but subsequent profit-taking led to a sharp decline in silver prices.

Macroeconomics:

Bullish: The EIA crude oil inventory for the week ending July 12 was -4.87 million barrels, lower than the previous value of -3.443 million barrels and the expected value of -33,000 barrels; the initial jobless claims for the week ending July 13 in the US were 243,000, higher than the previous value of 223,000 and the expected value of 230,000.

Bearish: The US retail sales month-on-month rate for June was 0%, lower than the previous value of 0.3% and higher than the expected value of -0.3%. The main refinancing rate of the European Central Bank for the Eurozone as of July 18 was 4.25%, flat with the previous and expected values.

Spot Market:

Silver: Last week, the spot demand in Shanghai saw low replenishment needs from July 15 to July 17 due to the relatively high silver prices. However, as the basis narrowed, market sentiment for selling was high, leading to an oversupply in the market. The competition for spot premiums/discounts on silver ingots was intense, with most spot transactions being at a discount this week. As silver prices plunged starting July 19, downstream buyers, who had been waiting for a long time, resumed their essential purchases, significantly increasing trading volume and market activity.

Downstream: The last silver price drop occurred at the end of June. After nearly 20 days of waiting, the market finally saw a price reduction. This time, the price drop was substantial, with a 2.8% decrease by 10 AM, and the day session prices continued to fall. Downstream buyers, who had been waiting for a long time, began to replenish their essential stocks and continued to wait for lower prices to make further purchases.