China Demand Diverges From The West
TD Securities says silver lease rates in London point to improving availability. It also states that global silver inventory coverage is improving compared with earlier tightness. The article says it was produced with the help of an artificial intelligence tool and reviewed by an editor. It is attributed to the FXStreet Insights Team, which selects market observations from external experts and adds analysis from internal and external contributors. We see a clear split in the silver market following the Iran conflict last week. While Western investors remain cautious, we have seen outflows of over 10 million ounces from major silver ETFs since the event began. This hesitation is being offset by a resurgence of strong physical demand from China. The Shanghai arbitrage is telling a powerful story, with premiums on the Shanghai Gold Exchange holding above $0.75 per ounce compared to London prices. This is supported by strong industrial activity, as recent data for February 2026 showed China’s solar panel output increasing 15% year-over-year. This indicates that Chinese buying is not just for investment but for real industrial use.London Supply Signals Improve
For our part, we are watching the improving supply situation in London’s over-the-counter markets. Silver lease rates have fallen, which points to better availability and contrasts sharply with the tightness we experienced earlier in the year. Last week’s Commitments of Traders report also showed managed money traders reducing their net long positions in silver futures for a second consecutive week. This is a significant change from the supply concerns we saw throughout much of 2025, when inventories were drawing down at an alarming rate. That period of tightness seems to be easing for the time being. The current conditions suggest that global silver inventories are stabilizing, not shrinking. This dynamic points toward a range-bound market in the coming weeks, where Chinese demand provides a floor while Western caution and improving supply create a ceiling. A strategy of selling out-of-the-money call options against existing positions could be considered to generate income from the expected lack of a major breakout. Options traders might also look at strategies that profit from low volatility, as the two opposing market forces could keep prices contained. Create your live VT Markets account and start trading now.
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