China is experiencing backwardation (where spot prices exceed futures) signals acute tightness, with local premiums spiking due to buyers scrambling for physical metal.
Shanghai's silver stockpiles are at 10-year lows, with some estimates suggesting only 30-45 days of usable supply at current consumption rates. This mirrors broader trends: COMEX inventories in the US are down 70% since 2020, and London vaults have dropped 40%. China's shortages are amplified by its reliance on domestic mining and recycling, which can't keep pace—silver is mostly a byproduct of copper and zinc mining, and new projects take 10+ years to develop.
Starting January 1, 2026, China is imposing strict export restrictions on silver, requiring government licenses for shipments. Only large, state-approved firms qualify—those producing at least 80 tonnes annually and holding about $30 million in credit lines—effectively sidelining small and mid-sized exporters.
