Retail and photovoltaic demand drive China's silver imports to a record high.

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China’s silver imports in March set a historical record, with retail investors’ buying frenzy and centralized stockpiling by the photovoltaic industry jointly pushing imports far above the seasonal average. Analysts warn that this explosive growth will be difficult to sustain.

According to Chinese customs data, China imported about 836 tons of silver in March, nearly three times the March average of about 306 tons over the past ten years.

The surge in imports was driven by two sources of demand: retail investors buying large amounts of small silver bars as an alternative to high-priced gold, and photovoltaic manufacturers rushing to stock up before the cancellation of export tax rebates on April 1.

Domestic silver prices, pushed up by strong demand, are significantly higher than international benchmarks, prompting traders worldwide to ship silver to China for arbitrage, with Hong Kong serving as the main transit point.

Explosive Import Growth Difficult to Sustain

However, the momentum of imports is already facing multiple cooling factors.

On the retail side, gold and silver prices have retreated from the historical highs set in January. The energy crisis sparked by the Iran war has heightened market concerns about inflation, dragging down the performance of non-yielding precious metals. The momentum for retail investors to follow and buy in has thus weakened.

On the industrial side, the photovoltaic industry consumes about one-fifth of global annual supply, with production capacity highly concentrated in China. But this demand pillar is also under pressure, as policy statements aim to control overcapacity in the photovoltaic industry.

Meanwhile, silver prices remain relatively high, which may prompt the industry to shift toward using cheaper base metals as substitutes for silver.

Wu Zijie, an analyst at Shenzhen Jinrui Futures, stated that "explosive import growth will certainly not continue," and that import flows will return to normal levels in the future. He pointed out that, given China is the world’s largest silver producer, there is no long-term basis for supply and demand imbalance in silver.

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