Silver’s Great Refill Slows Down: Chinese Vaults Reach Seven-Month Highs While Premiums Stay Above 10%
Copy link
Silver’s story over the past several months has been dominated by one theme: inventories returning to China at an extraordinary pace. What began as a historic physical drain during the first quarter of 2026 has evolved into one of the largest inventory rebuilding phases seen across Shanghai’s exchanges in years.
The latest figures show that combined Chinese silver inventories across the Shanghai Futures Exchange (SHFE) and Shanghai Gold Exchange (SGE) have reached approximately 1,824 metric tons, equivalent to 58.6 million ounces. This represents the highest inventory level in seven months and marks a dramatic recovery from the lows recorded earlier in the year.
At the same time, silver continues trading at a substantial premium in China. The latest Shanghai pricing indicates a premium of approximately 10.8% above LBMA benchmarks, suggesting that demand remains strong enough to absorb incoming supply despite the aggressive restocking cycle.
However, a closer look reveals something new. Inventories are still rising, but the pace of accumulation is beginning to slow. SHFE inventories increased by only 4.52 tons on the latest daily reading and 6.9 tons for the week, substantially smaller than the triple-digit weekly builds recorded during the peak of the restocking phase.
The figures now describe a market moving from rapid replenishment toward a more balanced equilibrium, where inventories continue growing but no longer at emergency rates.
The most important development remains the scale of the inventory recovery taking place across mainland China.
Combined silver inventories across SHFE and SGE have now reached approximately 1,824 tons, or 58.6 million ounces.
Breaking down the figures further:
Together, the two exchanges now hold more silver than at any point during the past seven months.
The significance of this recovery becomes clearer when viewed against the backdrop of the first quarter. Earlier in 2026, Chinese silver inventories collapsed to levels not seen in more than a decade as physical metal was aggressively withdrawn from vault systems.
The current inventory total represents a substantial reversal of that trend.
A second milestone is now coming into focus.
SHFE inventories are approaching the 1,000-ton level, finishing the latest reporting period at approximately 993.73 tons.
Psychologically, the 1,000-ton threshold is significant because it would place SHFE inventories firmly back into territory that appeared unreachable only a few months ago.
Yet the latest data suggests that momentum may be slowing as this milestone approaches.
The most recent daily increase measured only 4.52 tons, while the weekly increase totaled 6.9 tons.
Compared with the explosive inflows seen during April and early May, these figures indicate that the rebuilding process may be entering a more mature stage.
The market is still accumulating metal, but no longer at the extraordinary pace that characterized the earlier recovery.
What makes the current inventory story particularly interesting is that prices have not responded the way many market participants expected.
Historically, rapid inventory growth often places downward pressure on regional premiums by increasing available supply.
That has not happened.
Silver continues trading at approximately 10.8% above LBMA pricing in China.
The persistence of a double-digit premium despite the addition of hundreds of tons of inventory suggests that demand remains remarkably resilient.
Rather than overwhelming the market, incoming supply appears to be meeting existing demand requirements.
This distinction is important because it changes the interpretation of the inventory data. The market is not simply accumulating excess metal. Instead, inventories appear to be rebuilding while demand continues consuming a meaningful portion of available supply.
Several weeks ago, the dominant narrative was straightforward: silver was rushing back into Shanghai vaults at one of the fastest rates on record. Weekly inventory increases regularly measured in the tens of tons, and in some cases approached triple-digit additions as exchanges replenished metal following the severe physical drain seen during the first quarter of 2026. The market’s focus was almost entirely on how quickly inventories were recovering rather than where they ultimately settled.
That narrative is now beginning to evolve. Inventories continue to rise, but the pace of accumulation has slowed materially. The difference between a market adding 80 to 100 tons per week and one adding fewer than 10 tons per week is significant because it suggests that the emergency phase of replenishment may be ending. Much of the inventory recovery required after the Q1 depletion appears to have already taken place. As a result, future inventory movements may become increasingly influenced by underlying demand conditions rather than purely by logistical restocking efforts.
Despite the impressive recovery in Shanghai inventories, it is important to keep current stock levels in perspective. Combined SHFE and SGE inventories now stand at approximately 1,824 tons, a substantial improvement from the lows recorded earlier this year. However, compared with previous inventory peaks observed during earlier silver cycles, current levels remain relatively modest.
This is one reason why premiums have remained resilient despite months of sustained inflows. The market has undoubtedly improved its supply position, but it has not yet reached a point where metal can be considered abundant. Available inventories could still be absorbed relatively quickly if industrial demand, investment demand, or wholesale buying activity were to accelerate. The persistence of a 10.8% premium over LBMA pricing suggests that the market continues to view physical silver as a resource worth paying up for, even after the recent restocking wave.
The silver market today looks very different from the one investors were analyzing only a few months ago. During the first quarter, discussions were dominated by backwardation, rapidly declining inventories, and aggressive physical withdrawals from vault systems. The primary concern was whether available metal could keep pace with demand as inventories fell toward multi-year lows.
Today, inventories are rising, premiums remain positive, and physical markets appear considerably more orderly. Yet the persistence of double-digit Chinese premiums demonstrates that the market has not fully normalized. Instead, silver appears to be transitioning into a new phase where replenished inventories and healthy physical demand coexist simultaneously. Rather than signaling surplus conditions, the current data points toward a market that is becoming more balanced while still retaining many of the characteristics that supported the earlier rally.
The result is a silver market sitting somewhere between acute shortage and true surplus — a transitional phase where inventory rebuilding and physical demand are temporarily coexisting.
For bullion dealers, the key takeaway is that Chinese inventories have recovered dramatically, but physical demand continues supporting elevated regional pricing. Premiums above 10% suggest that buyers remain active even as warehouse stocks approach seven-month highs. The market is becoming more balanced, but not yet oversupplied.
For conservative investors, the current environment may be healthier than the conditions seen earlier in the year. Inventories are rebuilding, logistical stress has eased, and physical markets appear more stable. Yet the persistence of premiums indicates that demand has not disappeared. This combination often provides a stronger foundation than markets driven solely by scarcity fears.
For traders, the slowing pace of inventory growth may become more important than the inventory level itself. Much of the easy restocking appears to have already occurred. If weekly inventory additions continue shrinking while premiums remain near double-digit levels, the market may begin shifting focus back toward demand rather than supply.
In the near term, silver could continue consolidating within a broad range around the mid-$70s to mid-$80s per ounce as markets assess whether inventory growth has truly peaked. The slowing pace of accumulation suggests that the strongest supply-side pressure may already be behind us.
Over the longer term, the picture remains constructive. Chinese inventories have recovered substantially, but physical premiums remain elevated and global demand trends continue supporting the market. If inventory growth stabilizes while demand remains resilient, silver could gradually rebuild momentum toward the $90 per ounce region and potentially revisit the psychologically important $100 level over time.
Conversely, a sharp collapse in premiums combined with accelerating inventory growth would indicate that supply is finally overtaking demand. At present, however, the figures suggest a market that is becoming more balanced rather than one moving into surplus.
Across inventories, premiums, and physical flows, the data describes a silver market that has survived its depletion phase and entered a period of stabilization — but one where underlying demand remains strong enough to keep prices and premiums well above historical norms.
Hugo Pascal’s observation about the AU9999 contract hitting a 10-week volume high underscores the increasing significance of physical gold trading on the Shanghai Gold Exchange. This trend not only highlights robust domestic demand in China but also reflects broader shifts in the global gold market toward physical-backed assets.
Latest articles
Tool and strategies modern teams need to help their companies grow.
Invite users to stay updated with exclusive insights and market trends by subscribing to the newsletter.
Start stacking your bullion. Download the InProved app and build your legacy in gold and silver.
+65 8899 3720
support@inproved.com