Silver’s Rebalancing Phase: Shanghai Inflows, Record Withdrawals, and Premium Stability Above 12%
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Silver markets are currently showing a measurable rebalancing between physical demand and short-term inventory rebuilding in China. While prices remain below recent highs, data from Shanghai indicates that demand has not weakened, and inventory increases are occurring alongside record withdrawal activity.
Chinese silver premiums continue to hold at approximately 12% above LBMA benchmarks. Recent pricing shows silver at $80.97 per ounce in Shanghai versus $72.18 per ounce in London, representing a spread of $8.79 per ounce, or 12.18%. The five-day average premium stands at 12.55%, indicating consistency across sessions.
On the inventory side, Shanghai vault stocks have increased. Combined inventories across the Shanghai Gold Exchange (SGE) and Shanghai Futures Exchange (SHFE) reached approximately 755.5 to 782 metric tons, equivalent to roughly 24.3 to 25.1 million ounces. The increase includes a 55-ton weekly rise in SHFE inventories and a 98-ton weekly increase in SGE stocks, representing the largest inflow in three months.
At the same time, physical withdrawals from the SGE remain elevated. March withdrawals totaled 235.8 tons, more than double the 114.8 tons recorded in March 2025 and nearly double the eight-year average of 142.5 tons. Year-to-date withdrawals have reached 673 tons, up 146% year-on-year.
These figures describe a market where physical demand remains strong while short-term inventory replenishment occurs within a structurally tight supply environment.
Silver continues to trade at a significant premium in China relative to international benchmarks. On April 7, LBMA spot silver was priced at approximately $72.18 per ounce, while SGE fixing stood at $80.97 per ounce.
This difference represents a premium of $8.79 per ounce, or approximately 12.18%. The five-day average premium of 12.55% indicates that this pricing differential has been stable over recent sessions.
Premiums at this level indicate that domestic buyers are consistently transacting above global benchmark prices. The persistence of the premium across multiple trading days confirms that the spread is not driven by temporary dislocation.
Shanghai exchange inventories have increased over the latest reporting period. SHFE silver inventories rose by 55 tons week-on-week, with a daily increase of 27 tons contributing to a nine-week high.
At the same time, SGE inventories increased by 98 tons week-on-week, representing a 34% increase and the largest inflow recorded in three months.
Combined inventories across SGE and SHFE reached approximately 755.5 to 782 tons, depending on the reporting snapshot. In troy ounces, this corresponds to roughly 24.3 to 25.1 million ounces of silver held within Shanghai vault systems.
While the increase in inventory represents a measurable change, inflows into SHFE remain limited relative to earlier declines. Weekly inflows on SHFE have been recorded at approximately 13.5 tons, indicating that replenishment is occurring gradually rather than at scale.
Physical withdrawal data from the Shanghai Gold Exchange provides a direct measure of demand. In March 2026, total silver withdrawals reached 235.8 metric tons.
This figure is more than double the 114.8 tons recorded in March 2025 and exceeds the eight-year seasonal average of 142.5 tons by approximately 93 tons. The increase represents a 105% year-on-year rise.
Year-to-date withdrawals have reached 673 tons, representing a 146% increase compared with the same period in the previous year.
Withdrawals from the SGE represent physical metal leaving exchange vaults for fabrication, industrial use, or private ownership. The scale of withdrawals indicates that demand has remained elevated even as inventories begin to increase.
Commitment of Traders data shows adjustments in positioning across market participants. Managed money reduced gross long positions by 2.2%, while net long positions increased by 0.97%, equivalent to an increase of 108 contracts.
The increase in net long positioning occurred because short positions were reduced at a faster rate, with a 10.69% decline in gross short exposure.
Swap dealers also reduced net short positions by approximately 6.7%, achieved through a combination of increasing long exposure and reducing short positions.
These changes indicate that recent positioning adjustments have been driven by short covering rather than the addition of new long positions.
The combination of rising inventories and elevated withdrawal volumes provides a measurable view of market balance. While Shanghai vault stocks have increased to approximately 755–782 tons, withdrawals of 235.8 tons in March alone indicate that demand continues to remove metal from the system at a high rate.
The increase in inventory therefore represents partial replenishment rather than a shift toward surplus conditions. The persistence of double-digit premiums alongside inventory inflows supports this interpretation.
For bullion dealers, the interaction between inventory inflows and withdrawal rates remains the most relevant metric. With Shanghai inventories increasing by up to 98 tons week-on-week while withdrawals exceed 200 tons monthly, the balance between supply replenishment and demand consumption remains tight. Premiums near 12% continue to define replacement cost dynamics.
For conservative investors, the combination of stable premiums and record withdrawal data provides a measurable indication of sustained physical demand. A year-to-date withdrawal figure of 673 tons, up 146% year-on-year, reflects continued accumulation or consumption within the Chinese market despite price fluctuations.
For traders, the current structure defines both near-term and longer-term price expectations. In the near term, the combination of inventory inflows and short covering suggests that prices may consolidate within a defined range. With LBMA pricing around $72 and Shanghai pricing near $81, the immediate trading range appears anchored between the low-$70s and low-$80s.
Over the longer term, the scale of withdrawal data and persistent premiums provides a basis for upward pressure if inventory growth does not keep pace with demand. If withdrawals continue at levels above 200 tons per month while combined Shanghai inventories remain below 800 tons, the imbalance between demand and available supply may support a move back toward higher price levels.
Across inventory data, pricing premiums, and positioning changes, the figures describe a silver market undergoing short-term rebalancing within a broader environment of sustained physical demand.
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.
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