Silver may soar further as China curbs exports from January 1

The global silver market, already facing supply pressures, may experience further strain as China prepares to implement export restrictions on the precious metal starting in January 2026. The policy, also slated to be in effect throughout 2027, will require Chinese companies to obtain licenses to export silver.

Adding to the picture of robust demand, India imported over 2,600 tonnes of silver in September and October alone. October saw 1,715 tonnes of silver entering the country.

According to trade experts, the new Chinese policy is designed to protect “national resources.” It will likely grant export licenses only to large, state-approved firms capable of producing at least 80 tonnes of silver annually, effectively preventing smaller exporters from participating in the silver trade. The Silver Academy notes that China is the world's second-largest silver miner, responsible for 60-70% of global supply.

The Silver Academy suggests that China's motivations behind the policy could include reserving silver for domestic industries like solar panel and electronics manufacturing, driving up global silver prices, and gaining leverage over countries dependent on Chinese silver. The nation might also use silver as a geopolitical tool, similar to its rare earth export limitations, to exert pressure on other countries.

The Academy also warns that these export controls will further constrict a global silver market already operating at a deficit for several years. The projected annual supply shortfall currently exceeds 2,500 tonnes. Reduced silver availability from China could widen this deficit to over 5,000 tonnes per year, potentially leading to sharp price increases.

In related market activity, JP Morgan, the US multinational financial services firm, closed its silver short positions on CME between June and October, totaling 200 million ounces (6,750 tonnes). Simultaneously, the firm accumulated 750 million ounces (23,437 tonnes) of physical silver.

These developments coincide with reported silver coin and bar shortages at the Royal Mint of Canada and in the United States.

During September and October, the UK and Hong Kong emerged as the largest silver suppliers to India, shipping just over 1,000 tonnes and 880 tonnes, respectively. Switzerland supplied 225 tonnes, while the UAE provided over 140 tonnes.

Some suspect that the silver imports from Hong Kong consist of silver leased by the London Bullion Merchants Association from China and then shipped to India.

After peaking above $64 an ounce, silver closed the week at $62. Silver futures for March delivery also ended at $62. In India, silver March futures on the MCX closed at ₹1,92,615 per kg.

Silver's price has risen nearly 115% this year, outpacing gold's 64% increase. Cobalt is the only commodity with a larger gain this year, rising by 117%.

The factors driving silver's surge include a physical supply deficit, demand from the green energy sector, and geopolitical instability.