China’s silver imports soared to an eight-year high in the opening months of 2026, underscoring how intense industrial use, investor buying, and tight domestic inventories have reshaped the country’s precious metals market. Customs data released Friday showed China imported more than 790 tonnes of silver in January and February combined, with February alone accounting for nearly 470 tonnes, the highest ever for that month. The surge reflects a scramble for metal as domestic prices climbed well above international benchmarks, prompting traders to import silver from overseas to meet urgent demand.
The import boom comes after one of the most turbulent starts to a year ever seen in the silver market. Spot silver surged to a nominal record high of $121.62 an ounce on January 29 before collapsing to about $64 by February 6, wiping out much of the spectacular early-year rally. Even with that sharp reversal, Chinese physical demand remained robust, suggesting the market stress was rooted less in a global shortage than in localized supply bottlenecks inside China.
A combination of depleted exchange inventories, heavy speculative activity, and strong consumption from both investors and manufacturers has squeezed China’s market. Retail demand for silver bars has remained especially strong in Shenzhen’s Shuibei market, the country’s largest bullion trading hub, where merchants say bars sell quickly whenever stock becomes available. For many consumers, silver has become a more affordable alternative to gold, whose elevated prices have made it less accessible.
Industrial demand has also played a major role. China’s solar manufacturers, major users of silver in photovoltaic panels, have been front-loading production ahead of the removal of export tax rebates on April 1. Some producers also used the recent price collapse as an opportunity to buy on weakness, adding further pressure to an already strained market. As a result, inventories at warehouses linked to the Shanghai Futures Exchange and the Shanghai Gold Exchange have fallen to levels not seen in more than a decade. The shortage has pushed Chinese near-term prices sharply higher, creating a rare and pronounced backwardation, a market structure in which prompt delivery trades at a premium to future deliveries. On the Shanghai Futures Exchange, the front-month silver contract has jumped to a record premium over the next contract, signaling the market’s urgent preference for immediate supply.
Zhang Ting, senior analyst at Sichuan Tianfu Bank Co., said the unusually large backwardation points directly to an inventory crisis and a shortage of deliverable metal, while also leaving room for institutions to continue profiting from market squeezes. Further evidence of tightness has appeared on the Shanghai Gold Exchange, where short sellers have been paying deferral fees since late December to avoid making physical deliveries, a sign that securing silver to close positions has become increasingly difficult.
Analysts say the extreme price swings have been amplified by China’s new export restrictions on silver. Under rules introduced in 2026, outbound silver shipments now require official approval. Goldman Sachs warned in January that these controls could worsen local shortages, disrupt international trade flows, and even fragment the global silver market. In a note, Goldman analysts Lina Thomas and Daan Struyven said thinner inventories had created the conditions for repeated squeezes, with rallies accelerating as investor inflows absorb remaining metal in major vaults, only to reverse sharply when tightness eases.
They argued that the recent turmoil does not reflect a worldwide lack of silver, but rather regional supply bottlenecks that distort pricing. The greater risk, they said, is that participants begin hoarding local stockpiles instead of relying on a globally shared pool of metal. That would reduce liquidity and make silver markets more vulnerable to sudden, localized price swings.
Much of the silver imported into China has reportedly come through Hong Kong, where traders have taken advantage of unusually strong mainland premiums. Large silver bars in the territory, which typically trade at a discount to London prices, reportedly commanded premiums of up to $8 per ounce during the first two months of the year. Despite China’s heavy buying, London has so far absorbed the demand without major disruption. That resilience is partly due to a record inflow of silver into the London market after last year’s global squeeze, as well as a decline of more than 1,900 tonnes in global exchange-traded fund holdings, which has freed additional metal for the physical market.
Borrowing costs for silver in London have eased from their peak, though longer-dated leases remain expensive, reflecting lingering caution and continuing volatility. Visible inventories across major exchanges also remain low by historical standards, pointing to a broader backdrop of structural tightness, even if immediate dislocation has
There are, however, early indications that the most intense phase of the squeeze may be easing. Aggregate open interest on the Shanghai Futures Exchange has dropped to its lowest level in more than four years as investors trim positions ahead of the Lunar New Year holiday, which begins February 16. Analysts also say Chinese price premiums have recently softened, and solar-related demand has begun to slow as the tax rebate deadline approaches. In Shenzhen, dealers report that silver bars are no longer selling as easily as they did at the height of the rally. Some analysts believe retail investor demand could cool further unless prices resume climbing, since individual buyers often chase momentum rather than step in during a decline.
Still, any near-term easing may do little to change the broader picture. China’s import surge shows that the underlying demand for silver, both as an industrial input and as an investment asset, remains powerful. With domestic stockpiles still depleted, smelters facing limited capacity, and policy restrictions complicating trade flows, the market remains vulnerable to renewed volatility. For now, China’s silver market is a vivid example of how regional bottlenecks, speculative flows, and industrial demand can combine to create extraordinary swings in a relatively illiquid commodity even when the world as a whole is not running out of metal.