China’s silver imports jump to record high. Is it time to buy silver?China, the largest consumer of silver in the world, imported approximately 836 tons in March, continuing a strong trend of incoming shipments this year, as per Chinese customs data released on April 20 and reported by Bloomberg.
In March, China's silver imports hit a record high, driven by demand from retail investors and the expansive solar sector, leading to purchases significantly exceeding the seasonal average.
The Bloomberg report indicated that this is in contrast to the 10-year seasonal average for March, which is approximately 306 tons. The solar sector depends on silver mainly due to its unparalleled electrical conductivity, which guarantees optimal efficiency in transforming sunlight into energy.
Demand has increased as retail investors are investing in small silver bars, which serve as a less expensive alternative to gold, and solar manufacturers are ramping up production ahead of the April 1 expiration of export tax rebates. The solar sector accounts for approximately 20% of the annual silver supply and is predominantly based in China. However, Bloomberg's report indicates that the current high levels of imports may not be sustainable.
The robust demand has driven Chinese prices significantly higher than global averages, leading traders to transport silver from various locations worldwide to capitalise on the price differential. A considerable amount of the metal was routed through Hong Kong.
Silver and gold prices have retreated from the peaks they reached in January, as the energy crisis stemming from the Iran war raised inflation concerns, impacting non-yielding precious metals. Demand driven by retail, which usually follows significant upward price trends, has also stagnated.
Gold prices today remained relatively stable after dropping to a one-week low in the previous session. The spot price of gold was steady at $4,820.84 per ounce, while US gold futures set for June delivery increased by 0.3% to $4,841.2. The spot price of silver decreased by 0.1% to $79.82 per ounce.
As reported by Bloomberg, China's industrial sector is experiencing pressure due to Beijing's commitment to limit overproduction in the solar industry, which is likely to impact output, while persistently high prices may lead the sector to replace silver with less expensive base metals.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said that industrial demand for silver, particularly in the booming solar and EV industries, investment buying by investors through silver ETFs and huge speculation are driving silver prices up. The investment and speculative buying in the metal are several times more than the actual industrial applications demand.
“Therefore, silver price can remain excessively volatile in the short run. China has been a major buyer of silver recently. Even though price has been resilient recently there is high risk in buying silver. The price risk in gold is lower than in silver,” said Vijayakumar.
Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, believes that China's silver imports have jumped to a record high, reflecting a structural shift in demand that cannot be ignored. Our view remains disciplined: accumulate on dips, and use rallies as an opportunity to trim, not add.
“The setup is compelling over the medium term, but traders should brace for significant volatility in the near term — geopolitical uncertainty and the unpredictability of US trade policy under Trump will continue to whipsaw prices in both directions. Patience and positioning will matter more than conviction alone,” said Gulati.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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