Silver’s Tightening Delivery Signals: EFP Compression, COMEX Lows, and China’s Shift Back to Contango
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Silver markets are currently reflecting tightening delivery conditions alongside localized inventory rebuilding in China. Exchange for Physical (EFP) spreads on COMEX have compressed toward parity, while inventories in the U.S. continue to decline to multi-month lows. At the same time, Shanghai vault stocks have recorded modest inflows, and the domestic Chinese market has shifted back into contango after a period of backwardation.
The May 2026 COMEX EFP spread is now trading at approximately $0.02 per ounce relative to LBMA spot, effectively at the zero line, while the March 2026 spread remains negative at –$0.24 per ounce. This compression in spreads reflects a narrowing gap between futures pricing and physical delivery conditions.
On the inventory side, COMEX silver stocks have declined to 328.8 million ounces, marking a 14-month low. Within that total, registered inventory — available for delivery — stands at 76.7 million ounces, while eligible inventory accounts for 252.1 million ounces. A single-day decline of 2.61 million ounces highlights the continued movement of metal out of vaults.
In contrast, Chinese exchange inventories have increased. Combined stocks across the Shanghai Gold Exchange and Shanghai Futures Exchange rose to 672.3 metric tons, equivalent to approximately 21.6 million ounces. SHFE inventories increased by 9.3 tons week-on-week, while SGE inventories rose by 24.7 tons over the same period.
At the same time, the spread between SGE spot pricing and SHFE futures has shifted back into contango, with the differential reaching approximately CNY 180 per kilogram, or about $0.8 per ounce.
These figures describe a market where physical delivery conditions in Western exchanges remain tight while Chinese inventories show short-term replenishment and futures spreads adjust accordingly.
Exchange for Physical spreads on COMEX have narrowed significantly. The May 2026 contract is currently trading at approximately $0.02 per ounce relative to LBMA spot pricing, placing it effectively at parity. The March 2026 contract remains negative at approximately –$0.24 per ounce.
EFP spreads measure the cost or premium required to exchange futures contracts for physical metal. A spread near zero indicates that futures pricing is closely aligned with spot market conditions. Negative spreads, such as the –$0.24 reading on the March contract, indicate that futures are trading below spot, reflecting stronger demand for immediate physical delivery relative to forward contracts.
The tightening from wider spreads toward near-zero levels quantifies a shift in the balance between futures pricing and physical availability.
Silver inventories on COMEX have continued to decline, reaching 328.8 million ounces. This level represents the lowest inventory recorded in approximately 14 months.
Within the total, registered inventory stands at 76.7 million ounces. Registered silver represents metal available for delivery against futures contracts. Eligible inventory, which represents metal stored in vaults but not designated for delivery, totals approximately 252.1 million ounces.
The latest session recorded a daily outflow of 2,610,436 ounces. The continued decline in total and registered inventory indicates ongoing movement of physical silver out of the COMEX vault system.
In contrast to COMEX, Shanghai exchange inventories have recorded increases. Combined silver stocks across the Shanghai Gold Exchange and Shanghai Futures Exchange reached 672.3 metric tons, equivalent to approximately 21.6 million ounces.
SHFE inventories increased by 9.3 tons week-on-week, representing a 2.6% rise. SGE inventories increased by 24.7 tons over the same period, reflecting a 9% increase.
Separately, SHFE inventories reached 376 tons, marking a seven-week high. The increase included a daily inflow of 10.2 tons and a weekly inflow of 13.6 tons.
These figures indicate that physical silver has been delivered into Shanghai exchange vaults in recent sessions.
The pricing relationship between SGE spot and SHFE futures has shifted. The spread between SGE Ag(T+D) spot pricing and SHFE futures contracts has moved back into contango.
The differential currently stands at approximately CNY 180 per kilogram, equivalent to about $0.8 per ounce. In this structure, futures prices are trading above spot prices.
A contango structure indicates that forward pricing incorporates carrying costs such as storage and financing. The shift from backwardation to contango reflects a measurable change in the relationship between immediate and future delivery pricing within the Chinese market.
The combined data across COMEX and Shanghai highlights differing regional dynamics. COMEX inventories continue to decline, with total stocks at 328.8 million ounces and registered inventory at 76.7 million ounces. EFP spreads have tightened to near zero, indicating convergence between futures and spot pricing.
At the same time, Shanghai inventories have increased to 672.3 tons, while futures pricing has shifted into contango relative to spot. The inflows into SHFE and SGE vaults correspond with a modest increase in available inventory within the Chinese exchange system.
These figures illustrate a divergence between declining inventories in Western exchanges and short-term inventory replenishment in China.
For bullion dealers, the key figures remain COMEX registered inventory and EFP spreads. With registered stocks at 76.7 million ounces and May 2026 EFP spreads at $0.02 per ounce, delivery conditions remain closely aligned with spot pricing.
For conservative investors, monitoring inventory levels across exchanges provides insight into supply conditions. COMEX inventories at a 14-month low and Shanghai inventories at 672.3 tons represent two measurable indicators of regional supply dynamics.
For traders, the interaction between EFP spreads and futures curve structure is central. The March 2026 spread at –$0.24 per ounce and the May 2026 spread at $0.02 per ounce quantify the shift in pricing relationships. At the same time, the return to contango in China at approximately $0.8 per ounce provides additional context for futures positioning.
Across inventories, spreads, and regional pricing structures, the data describes a silver market balancing declining supply in Western vaults with short-term inventory increases and pricing adjustments in China.
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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