Silver futures hit record highs as China's inventories reach near-decade lows.

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Silver is becoming the new focal point of the commodities market. Amid a series of signs of tightening supply, silver futures prices have reached new highs. On Friday, silver futures on the New York Mercantile Exchange rose 0.57% to $53.93 per ounce.

The direct reason for the price increase is intensifying market concerns over supply. According to Wind data, during the week of November 24, silver inventories at the Shanghai Gold Exchange dropped by 58.83 tons to 715.875 tons, the lowest since July 3, 2016. On November 25, the inventory managed to rise by just 21.3 tons, but still remained near a decade low.

According to Jiemian News, due to concerns over higher cross-border freight costs as a result of tariffs, there has been a so-called "cross-border migration" of commodities such as gold, silver, and copper between major warehouses in New York and London as traders arbitraged ahead of anticipated tariff deadlines. Warren Patterson and Ewa Manthey of ING stated that the trigger for this movement was a recent supply squeeze, which once pushed silver prices to historical highs. Data shows that China's silver exports rose above 660 tons in October, marking a new record high.

Meanwhile, the entire precious metals market is also supported by the macro environment. Traders generally bet that the U.S. Federal Reserve will cut interest rates in December, boosting the appeal of non-yielding assets such as silver. This expectation has provided a solid foundation for precious metals prices while intensifying the impact of supply tightening on prices.

China’s Export Surge Pushes Inventory to Lows

Developments in the Chinese market are the core driving force behind this round of silver price increases. According to ING analysts, the sharp depletion of China's silver inventory is directly related to recent large-scale exports to London.

Due to statistical tax premiums, prices of New York commodities tend to be higher than those in London and other regions. While tariff policies are yet to be implemented, a price spread exists and thus allows for arbitrage opportunities, prompting traders to ship goods to U.S. warehouses in advance to capture the spread.

As a result, inventories of various metals at the London Metal Exchange (LME) reached rock bottom at one point, which further triggered calendar arbitrage activity and intensified short squeeze logic, causing certain metals markets to experience liquidity crises. This trend peaked in October, when exports exceeded 660 tons and directly led to a rapid decline in domestic inventories.

"Domestic trading of silver and non-ferrous metals will, to some extent, be affected by the movement of overseas inventory to the U.S., and this effect is bidirectional, mainly reflected in prices and arbitrage behavior," Zhou Ji, Senior Director at Nanhua Futures Research Institute, told Jiemian News.

Rate Cut Expectations Support Precious Metals Market

The rise in silver is not happening in isolation—rather, it is a microcosm of the entire precious metals sector strengthening under the expectation of loose monetary policy. The market’s rising anticipation of a Fed rate cut in December has supported non-yielding assets like gold and others. Soojin Kim from Mitsubishi UFJ Financial Group (MUFG) pointed out that although New York gold futures fell slightly by 0.1% to $4,196.20 per troy ounce, overall prices remain at high levels.

Expectations of a rate cut have been reinforced by dovish comments from Fed officials. Fed Governor Christopher Waller stated that the labor market is already sufficiently weak, providing reason for another rate cut in December. New York Fed President John Williams also believes there is still room for further rate cuts.

Additionally, according to media reports, Kevin Hassett, regarded as a dove and a top economic advisor to President Trump, has become a leading candidate for the next Fed chair, further strengthening market confidence in low interest rates. Analysts from ANZ Research stated in a report that lower interest rates are beneficial to gold and other precious metals.

Supply Shortage May Drive Copper Prices Higher

The theme of tight supply is also fermenting in the industrial metals market, especially copper. Eun Young Lee of DBS Group Research stated in a report that the growing shortage of copper supply may drive prices higher. The analyst predicts that due to a supply gap that may widen to 316,000 tons next year, the average price of copper in 2026 could rise by 3.1% to $9,900 per ton. Copper demand is being continuously driven by investment in data centers and power grids, while growth in mine supply is limited by production disruptions and declining ore grades.

Signs of tight supply have already appeared in commercial negotiations. ANZ analysts noted that Chilean copper producer Codelco is seeking to raise premiums on its 2026 annual contracts sharply to $350 per ton from $89 per ton this year. Under the dual influence of tightening supply and strong demand, DBS believes China’s copper mining companies may benefit, with Zijin Mining and MMG named as top picks. MMG, with 74% of its revenue from copper, is seen as an ideal investment target in the copper market.

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