Silver’s Split-Screen Week: China Restocks, Curves Disagree, and the EFP Keeps Whispering “Near-Date Matters”
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The silver tape rarely moves in a straight line, and last week was a masterclass in how the plumbing sets the price. China kept rebuilding its on-shore stockpile for a third consecutive week, spot premia stayed positive in Shanghai, COMEX posted its largest daily inflow in two months—and yet the term structures on either side of the Pacific disagreed: backwardation in New York versus contango in Shanghai. Layer in a busy Exchange-for-Physical (EFP) bridge and the message is consistent: the market continues to pay for immediacy, but the cost of “now” depends on where you’re standing.
Start with the ledger you can count. By the latest tally, Shanghai silver vaults are up 79 tons week-over-week to ~900 tons (≈28.9 Moz)—the third straight weekly rise. That snapshot came with a –12.53-ton daily draw from yesterday, a reminder that restocking in a tight system is never a straight staircase. Earlier in the week the build looked even punchier: on Dec 17, stocks hit a two-month high, +91 tons W/W to ~912 tons (≈29.3 Moz); a day prior, the weekly gain printed +70 tons to ~891 tons. The destination is clear even if the path wobbles: after months of drawdowns, China is putting bars back into the pipe.
Price validated the move. Shanghai silver traded at a premium to London, printing about $67.43/oz, roughly +3.4% above LBMA on Dec 17. Across the week, our two premium methodologies kept the basis positive—~+1.9% to +2.75% at times—with the faster “blue-line” estimator (shorter lookback) capturing the intraday swings more cleanly. A simple translation: the on-shore market is still willing to pay up for deliverable metal.
Here’s where it gets interesting. On Dec 16 the COMEX curve remained backwardated—near-dated futures below spot—while the SHFE curve in China sat in contango—near-dates above spot. The same metal; two structures.
Why the split? A few reasons:
If you need an anchor in the fog, the Mar ’26 contract trading roughly flat to LBMA mid-week is that anchor: it tells you the stress is near-dated, not systemic.
The Exchange-for-Physical (EFP) is the market’s service road between futures and deliverable metal. When you see negative EFPs (futures below spot), the system is paying a premium for “bars now”. When EFPs shrink toward zero from either side, basis risk is compressing; positive EFPs that widen tell you carry (funding + storage + basis risk) is taking price.
How does that help you predict direction?
This week’s mix—US backwardation, China contango, positive China premia, shrinking EFPs toward flat on some deferred lines—is textbook “near-date matters.” It doesn’t scream verticals; it whispers that spot keeps the upper hand until the ledger says otherwise.
Friday brought the largest COMEX silver inflow in two months—+1.2 Moz (≈37.5 t)—pushing combined stocks to ~454.6 Moz. Useful, but read the footnotes: Asahi and Brinks moved a combined ~7.2 Moz (≈224 t) from registered to eligible. That doesn’t change total metal, but it reduces the immediately deliverable float. Registered is the “delivery-ready” shelf; eligible is good metal not currently tagged for delivery. In a week where the front of the US curve is already backwarded, a big reg→elig swing tells you the street is less willing to have bars sitting with a delivery tag attached. It’s not panic; it’s prudence. But it tightens the near-date math.
Put the pieces together:
In that setup, the highest-probability path is continued two-way trade with upward bias in spot as long as the China–LBMA premium holds positive and the US front keeps a backward tilt. A decisive flattening of Shanghai’s contango or a swing to negative premia would be your first warning that the near-date tightness is easing.
Don’t guess the basis; watch it. During Shanghai hours, track China premia vs. LBMA for silver (and gold, platinum) on inproved.com/lbma-vs-sge. Pair that with a daily glance at COMEX category tables (combined vs registered) and a check on front-month EFPs. If premia stay positive, registered keeps leaking, and EFPs refuse to normalize, the market is still paying for “now.”
For desks, this is a replacement-cost market. Stage deliverable product in hubs where lift-out is frictionless and paperwork is boring (Singapore/London), and quote availability instead of heroics when clients see the China premium and call.
For conservative savers (PMETs, civil servants, family offices), the signal is ladder and allocate. You’re not trying to nail the day Shanghai flips back to contango + discount; you’re trying to own ounces before the rest of the curve is forced to pay for them. Fully allocated custody, sane sizing, and a willingness to let the EFP tell you when urgency is getting expensive—those are the edges that survive volatility.
Bottom line: the market keeps paying a convenience yield for near-dated silver—even as China quietly refills the shelves. Until EFPs normalize and the China–LBMA basis cools decisively, spot holds the initiative.
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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