A Supply Squeeze Tightens Its Grip on the Global Silver Market

Silber Preis XC0009653103

A significant shift in global silver supply dynamics is unfolding, driven by new Chinese export controls that took effect on January 1, 2026. These regulations threaten to drastically tighten the availability of refined silver worldwide, potentially creating a major supply bottleneck for Western industry. Simultaneously, investors are navigating heightened volatility from recent exchange interventions.

The core of the emerging crisis lies in China's dominant position in the refining sector. Although the nation mines only 13% of the world's raw silver, it processes between 60% and 70% of the global supply into high-purity material. Its new policy effectively curtails exports by granting export licenses exclusively to companies with an annual production exceeding 80 tonnes.

Early market signals already point to tightening physical availability. Premiums for physical silver have risen in key markets like India and China, a traditional indicator of acute scarcity. This "China First" strategy places a direct strain on industrial consumers outside its borders who depend on this refined material.

Exchange Intervention Triggers a Technical Correction

Despite these fundamental supply concerns, the silver price recently underwent a sharp technical correction. On a weekly basis, the precious metal registered a decline of 10.20%. This pullback was primarily triggered by a regulatory move from the CME Group, the world's largest futures exchange.

At the turn of the year, the CME raised margin requirements for silver futures contracts by 30% to $32,500 per contract. This increase forced highly leveraged speculators to liquidate positions to meet margin calls, driving the price down from its recent 52-week high of $81.66. The metal has since found some stability, with its current price around $71.55. While this remains comfortably above the 50-day moving average of $61.46, annualized volatility exceeding 60% underscores persistent market nervousness.

Wall Street Forecasts Lag Behind Market Reality

A striking divergence exists between the actual market price and the conservative estimates from major institutional analysts. As trading occurs well above $70 per ounce, bank forecasts appear notably outdated:

• J.P. Morgan anticipates an average price near $58 for the fourth quarter.
• UBS, in a November assessment, projected a target of just $55 by mid-2026.
• TD Securities holds an even more cautious view, forecasting $45.

These skeptical outlooks contrast sharply with tangible industrial demand. The Silver Institute reported that demand from the solar industry alone reached nearly 200 million ounces last year. Market observers also note a growing decoupling: while paper trading is being made more expensive via higher margins, investment is increasingly flowing into physically-backed vehicles like the Sprott Physical Silver Trust.

The silver market is now caught in a crosscurrent. On one side, regulatory actions on futures exchanges are increasing trading costs and volatility. On the other, a fundamental supply constriction is building due to China's export policies. As long as industrial demand remains robust and China maintains its restrictive stance on refined silver exports, any technically-driven price dips are likely to attract swift buying interest from those seeking physical metal.