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Informist, Saturday, May 2, 2026

MUMBAI – The silver market, which remained tight last year as well as earlier this year, saw this tightness ease significantly from February as some of the factors supporting the rally lost their vigour, Metals Focus said in a note released Thursday. "2025 was the year when silver's deficit finally caught up with it, as lower inventories and metal being pulled out of London or tied up in ETPs (Exchange Traded Products) created explosive conditions for lease rates and prices. Early 2026 saw the market remain tight amid a surge in physical investment, although this tightness eased significantly from February onwards, as some of these supportive factors have unwound," it said.

Nevertheless, the market is seen vulnerable to periodic liquidity squeezes, the precious metals consultancy added. On Friday, the July futures contract on COMEX closed at $75.84 per ounce, up 2.5% from previous close. 

One of the factors that has helped ease the tightness is the outflow from CME-approved warehouses. After peaking at 531.9 million ounces in October, CME silver inventories have recorded sustained withdrawals since then, and are currently at 315.2 million ounces, a level last seen in November 2024, effectively unwinding all tariff-driven inflows between December 2024 and October 2025, it said.

Much of these CME outflows were redirected abroad, data showed. US silver bullion exports totalled 95 million ounces in the first two months of 2026, already exceeding annual export totals in most recent years. The UK remained the largest destination so far this year, accounting for just over half of these exports, Metals Focus said.

Despite the sizeable US shipments, silver bullion held in London commercial vaults fell slightly in the first quarter of 2026 to 883.7 million ounces, down 1% from the previous quarter. "This largely reflects acute bullion supply shortages in certain markets in early 2026 following a surge in physical investment. As regional  liquidity tightened, traders increasingly drew on London stocks, with the Middle East and East Asia once again among the top destinations for UK silver exports. As a result, the UK was a net exporter of silver bullion in the first two months of the year, although a reversal has been evident since March," the metals consultancy said.

However, global identifiable inventories remain low compared to levels seen in early 2020s. More importantly, the silver market is expected to remain in a fundamental deficit in 2026, at a level similar to that recorded in 2025, the release said.

"This would mark the sixth consecutive year of deficit and, combined with elevated ETP holdings and the prospect of improving investor interest later this year, implies a continued cumulative drawdown of stocks. As a result, the market remains vulnerable to periodic liquidity squeezes. While such events will remain uncommon, structurally lower liquidity than in previous years suggests that price and lease rate volatility will persist," Metals Focus said.  End

Reported by Abhijit Doshi

Edited by Tanima Banerjee

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