LBMA Silver-Squeeze Now China's Problem

GFN- (Beijing) China's silver inventories have been nearly depleted as exports surged in October, compounding a modest 3.55% month-on-month decline in domestic production and setting the stage for tighter market conditions ahead.

Silver output from key producing provinces-Henan, Yunnan, Shandong, and Zhejiang-fell modestly in October as maintenance shutdowns at copper smelters and end-quarter stock audits curbed supply. While lead smelters sustained by-product output thanks to strong refining margins, disruptions at copper facilities and lower raw material grades at lead-zinc operations in Guangxi, Gansu, and Inner Mongolia point to further reductions in November.

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For more than a century, London has served as the hub of global precious metals trade, where benchmark prices are set and vaulted bars circulate among a tight network of banks. Secure trucks once handled those flows daily. Today, cargo planes are stepping in. Traders are reportedly booking transatlantic freight to move bulky silver bars from New York to London, paying rates typically reserved for gold to capitalize on the premium in the London spot market.

Market sources indicate some producers still plan to withhold spot sales in early November, despite expectations that easing London liquidity strains and narrowing export margins could restore domestic circulation later in the month. The near-term picture remains one of tightening supply and thin inventories across China's silver sector.