Silver's Refining Queue Stretches to Four Months as Solar Demand Retreats and Yields Bite

Silver closed at $60.05, down 2.7%, as Scottsdale Mint flags refining delays while Deutsche Bank warns of a 2027 surplus on weaker solar demand.

Silver's physical plumbing is flashing two contradictory signals at once. While Scottsdale Mint chief Josh Phair reports that silver refining is running three to four months behind schedule depending on the material, finished metal remains readily available across the US market — a mismatch that points to a bottleneck in smelting capacity rather than any shortage of deliverable supply.

That nuance matters, because it cuts against the tighter narrative that has periodically gripped the market. COMEX-registered inventories stood at 102.29 million ounces at the start of the week, with total exchange-approved stocks — registered and unregistered combined — reaching 337.94 million ounces in the depositories.

A 2.7% Slide Puts the $60 Floor to the Test

The price action offered little comfort to bulls. Silver shed 2.7% on Wednesday to close at $60.05 an ounce on COMEX, leaving the metal roughly 51% below its 52-week high of $121.78. The retreat was driven by a firmer dollar and elevated US Treasury yields, which erased earlier relief for the precious metal. Geopolitical risk in the Middle East, meanwhile, failed to provide any support.

The macro backdrop remains the dominant headwind. Higher policy rates raise the opportunity cost of holding non-yielding assets like silver while simultaneously bolstering the greenback. Mixed US economic data have muddied the rate path: a soft employment reading briefly eased fears of further tightening and lent support to prices, and the Bureau of Economic Analysis reported August PCE inflation up 0.3% month-on-month with the core rate adding 0.2%. Even so, inflation is proving stubborn, and investors are now fixed on upcoming US consumer price data and further Fed commentary for clues on whether the restrictive stance will persist.

China's Exports and a Producer's Warning

Supply-side developments add another layer. Chinese customs data show August 2026 exports of fine silver of at least 99.99% purity rose 15.8% from the prior month to 405.98 tonnes. On a year-over-year basis, however, shipments slipped 0.6%, and the first eight months of the year totaled 3,031.51 tonnes — a 2.6% decline versus the same period a year earlier.

Mining operations are showing strain of their own. Endeavour Silver reported third-quarter 2026 production up 19% to just under 2.10 million ounces of silver, yet operational interruptions at its Terronera and Guanaceví sites mean full-year output will now land at or slightly below the bottom end of its previous guidance range. The company said it will detail the revised outlook on November 9.

Solar's Retreat Loosens the Market's Grip

The most consequential shift may be on the demand side. Deutsche Bank flagged roughly a week ago that a supply surplus could emerge as early as 2027, citing swelling inventories and fading industrial consumption. Analyst Daniel Ghali noted in early October that freely available stocks in London vaults had climbed to their highest level since November 2024, with CME warehouses and Shanghai inventories also posting gains.

The culprit is solar. By the institute's calculations, global silver consumption in photovoltaic applications will contract by more than 20% in 2026, with China's usage falling by roughly a third. Until fresh data signal relief on the rates front, the upside looks capped.

Traders will get their next read on speculative positioning when the Commitments of Traders report lands on October 9.