Chinese Solar Cutback Loosens Silver's Grip as Inventories Swell Across Three Continents

Deutsche Bank's Ghali says London free silver stocks hit highest since November 2024, as Chinese solar demand is seen down about a third in 2026.

Silver's long stretch of tight physical supply is finally showing signs of loosening, with stockpiles rebuilding in London, New York and Shanghai at the same time that the metal's biggest industrial consumer pulls back.

Daniel Ghali, a metals specialist at Deutsche Bank, told BNN Bloomberg on Friday that freely available silver inventories in London have climbed to their highest level since November 2024. Depots monitored by the COMEX and the Shanghai exchange are filling up as well — a buildup that points to a market no longer scrambling for metal.

A Third Less Solar Silver From China

The shift traces back to Asia. Ghali expects Chinese industrial demand for silver used in solar manufacturing to land roughly one-third below last year's level in 2026.

That forecast sits awkwardly beside projections made barely a week earlier, when Metals Focus and the Silver Institute still penciled in a sixth consecutive annual deficit for 2026, estimated at about 46 million ounces. Should the Chinese pullback persist, Ghali cautions, the shrinking shortfall could flip into a physical surplus as early as 2027.

Exchange data already reflect the inflow. COMEX inventories rose by roughly 2.5 million ounces in the week through September 25, reaching 332.6 million ounces in total. Registered stocks slipped by 1 million ounces, while eligible holdings — metal that meets delivery standards but isn't earmarked for settlement — jumped by 3.5 million ounces.

Speculators Head for the Exits

The prospect of easier supply has short-term investors retreating. The U.S. Commodity Futures Trading Commission recorded a sharp unwind of positioning on the New York futures exchange, with speculative net-long contracts falling by 5,278 in the week to September 29 to 7,738. With warehouses refilling, few traders appear willing to press aggressive upside bets.

Futures prices felt the drag. Silver settled at $60.71 an ounce on the COMEX Friday, down 1.0% on the day and 14% since the start of the year. The metal remains about 50% below its 52-week high.

Soft Payrolls Offer Only Partial Relief

Macroeconomic news lent a measure of support. Figures from the U.S. Bureau of Labor Statistics on Friday showed American employers added just 29,000 jobs in September, with the unemployment rate rising to 4.2%. The cooling labor market weakens the case for further Federal Reserve rate hikes — and lower rate expectations tend to burnish the appeal of non-yielding assets like silver by reducing the returns available on fixed-income investments.

Even so, rate hopes have not been enough to fully offset the weight of rising physical stockpiles.

Traders now look to a busy data calendar for direction. Purchasing managers' indexes for the services sector in the U.S. and the eurozone are due Monday, followed on Wednesday, October 7, by the release of the Fed's latest meeting minutes, which could shed more light on the path for interest rates.