China's expanded silver export restrictions, implemented January 1, 2026, reduced exports by an estimated 35% in Q1, tightening global physical availability. The policy secures domestic supply for China's strategic industries including solar manufacturing and electronics.
The controls have created a two-tier market: Chinese domestic prices trade at a discount to international benchmarks, while physical premiums in London and New York have widened to ~$2.50/oz over spot. Buyers in Southeast Asia and Europe scramble for alternative supply.
Silver ETFs saw net inflows of $1.8B in May as retail investors seek exposure to the deficit narrative. The Silver Institute reports industrial fabrication is forecast to decline 2% in 2026 due to thrifting, but investment demand fills the gap. Physical premiums suggest declining exchange inventories.