Transcript
7/30/2019 The Chinese Silver Market 2012
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7/30/2019 The Chinese Silver Market 2012
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Disclaimer
Wh ot h b d to th o th oto th dot, th ott o th dot
podd wthot gt, odto o wt to t , opt o bt. it ot to b
otd otto o o to b o po t, td podt, oodt, t o td
tt. To th xtt pttd b w, w, oth b o o gop o op d thd pt
otd to hb xp xd:
a odto, wt d oth t whh ght othw b pd b ttt, oo w o th w o qt.
a bt o dt, dt o oqt o o dg d b po o ogzto dg o g
o th dot dg (wthot tto) o o o o , o o b, o o pot o ott, o
o tptd g, o o goodw d whth d b tot (dg gg), bh o ott o othw,
ob.
B otg to d th dot, o g to th bo t d odto th tt.
TablE of ConTEnTs
1. itodto d ext s 3
itodto 3 mkt stt 3 mkt Otook 4
2. Dgto d Hto rw o th ch mkt 5
Hto Bkgod 5 ro 1979-1999 5 lbzto 2000-2012 6
3. s spp ch 8
itodto 8 m Podto 8 mg Otook 10
Podto o cott d rd 11 sp 14
Got stok s 15
4. s Fbto Dd ch 16 itodto 16 idt appto 16 Photogph 19
Jw 20 sw 21
5. s itt Dd ch 22
rt itt 22 coodt exhg 23
6. s ipot d expot 24
Bo ipot d expot 24 s-td d idt s shpt 25
Fo Box s O ch 10
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The Chinese markeT - DeCember 2012
1. inTroduCTion and ExECuTivE summary
INtRODuCtION
Th t two dd h wtd b o
gt hg th ch kt. lookg
bk to 1990, t to tht th ot w o
t p th gob kt. Th
, how, oowg pod o obt gowth, ch
ow th wod od gt bto d
k to bo th od gt pod, wth t
h o gob dd d pp tdg t 17% d
14% pt. moo, tkg to ot ch
g pot o th o o b t
ott d, o th dd d, -td
podt, t tht ch h pd g
pott o th gob kt.
agt th bkdop, th s ittt h
ood Thoo rt GFms ot o to pod
oph w o th ch kt, bt
o to x th o to (h gto
hg d th bod oo bkdop) tht h
fd th pd xpo th ot
kt. i ddto, th pot dd th otook
t o th dopt tht ght o wth th
ot o th hot to d t.
it hod b otd tht, wh w h b odtg
h ch o od 20 , zg
pp d dd h g pod to b
hgg, pt b o wht hgh gtd
dt. mwh, tx t (o, t t,
dt) h o todd o tt
g kt z. a t, o ttt
tg to pp hod b wd wth to,
th xt th pott o dob-otg,
w pott k dtg th o o tp o
pp, oth wod whth t t to
podto, p o od o potd
b t ott. Wh t o to bto
dd, th pt h o b optd b th
t tht poto o d dot h b
od o potd tdt podt, whh
tho dtd to th ot o og (g GFms
thodoog o g bto dd t th
ot ). i ddto, good pt o th potd
-btd podt h ow t p. Tkg
h dt t tho d to oo
pt o th kt. a h, thogh w odt
to th o o o dt, w wod d
od tht th pt o th opx d d
kt tht t d po.
MaRket stRuCtuRe
Th tt o th dt ch, t th t
o wtg, ot ogzb o th tto 20
go. Fo 1990 to 2001, th ch kt
wtd o zb dg p,
pp o o podto d p ootb
xdd bto dd. s 2002, how, th
pt hgd dt, wth kt dt t
ppg tht d th gowg to 23.0 moz (715
t) t . O th pod, th gp w p d
b ht potd bg b t
ott og wth odt o o bo
pot.
Th ht th 2000 w t d b th
bzto o th ch kt, whh ttd
2000 ( dtd do o kt dgto
ch d t pt o th dt podd
chpt 2). ao o pot thogh h b obt
ch oo, wth GDP gowg t tggg
10% p btw 2000 d 2011. it hod b
td tht th tgth o th ch oo o
th pod h b pt hpd b boo th
tg to og wth h tt
tt d bdg otto, both o whh
h bootd dd o dt t. moo,
hp dot opto d dpob
o h o td jo dd o
o podt. Th h t hpd to t
gowth th tg to ch, p
t wh th ot xpot to h b ht
b gob oo dowt.
lookg t pp d dd ch o
dt, ch podto h b o
td g td, o th dobg o th t
dd o o. c to th h b pd dopt
th ot b t g to, whh t
h d to hp podd b-podt.
i ott, th gowth p h b
o td, wth pp o th o otg
o 6% o th ot podto t .
spg, wh dot otpt xpdd pd o
th t dd, th g gt o o pp
to th ch kt 2007 h o o
od o potd b t ott. a
dd bo, th ft th a gt
gowg pptt o w t. ewh, p
pp h o odd otb o th pt
dd, bt o t ow b.
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Tg to dd, ch dt bto
h jod ot tptd pod o gowth
o 2000-11, gg 11% p , hpd b
obto o to h pot oo
bkdop d th oto o tg pt
o t oo to ch wh podto ot
kd ow. Th ot pd oo gowth d
otd dpob o h o pd
o dto pdg, wth jw d
w bg otb b.
ch tt kt o h dgo
odb dopt, t tdg t
b b to th g pb o th shgh
God exhg 2006 (d o th shgh Ft
exhg th ). i 2009, oth k hg w
d b th Pop Bk o ch (PBOc), whh owd
pt to to b bo b ch. Th
hg, og wth p p po
d gowg d o th pb to d th t
d gowg fto p, h dd o
both ph d pp podt pt
t .
MaRket OutLOOk
i pt o pd dopt th ch
kt, both dd d pp xptd to
h th gowth og .
sttg wth podto, w o dot
otpt ot g o th xt op o . Th
gowth pd o tog pojt pp o
p , opd wth ogog g
podd b-podt o b t d god g.
G w b th gtd b gt dg o
ozto d oodto o th ch
g dt. it o ot tht thogh th b
t to w ot to xpd ch, th ogog
odzto, d tog tt otto
pt, w o kp ch pot o w t
t td o pod o t. s od
o potd ott tho k to
t otb hgh . ad o gowth otpt,
p pp t to pot hth g, g thk to
ob tx t, tght ot gto
d tog p po.
Tg to th dd d o th qto,
bto t to o ot to th og
, wth photogph dd th o to pot
o. Th tgth o dt dd w th
k d bhd th gowth, hf th t o tb
dot oo d o th xpot to.
Wh g tg ot d to hp
owdow oho oto, th hod b bod
ot b g ot d b dot -
t to o to hgh -ddd gt,
whh h b o og dotd b dopd ot.
Pot xp o w gowth h d
b ftd dot podto o
powd th t op o , t o
gt pot thoog. mwh,
g tb oo bkdop, ch k to
t t dg p jw bto, dd b th
gowg popt o wht jw og th oth
dogph, g pooto o bdd jw d
xpo o jw hop.
lt, ch t tt dd o o
ot to gow obt o th hot to d t,
wd popto b g to b d
o. Gowth pp tdg o od t ot to
b o dt, wd d t ow
qto ot opd to god hod pod tog
boot to to tt.
cHinese silver suPPly cHinese silver DemanD
0
50
100
150
200
250
300
20102008200620042002
Millionounces
Source: Thomson Reuters GFMS
Bullion Imports
Scrap Supply
From Imported
Concentrates
Mine Production
0
50
100
150
200
20102008200620042002
Millionounces
Source: Thomson Reuters GFMS
Physical Bar Investment
Coins & Medals
Industrial Applications
Jewelry
Silverware
Photography
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2. Deregulation anD historical review of the
chinese silver market
Historical background
Cias associatio wit sier is a og oe, wit te
cotrs moetar sstem or cetries based o a sier
stadard (goig o te stadard i 1935). Foowig te
reotio i 1949, sier took sometig o a back seat
rom te perspectie o ocia poic. From 1949 to 1982,
priate idiidas i te ew Peopes Repbic were
orbidde to ow god ad sier ad te Moopoistic
Prcase ad Maagemet sstem or god ad sier was
impemeted. Te mai aim o tis sstem was to proibit
a otfows o god ad sier rom te cotr ad to
ecorage deposits o god ad sier or te ew Remibi
crrec at a set rate. Frtermore, priate tradig o
god ad sier ad priate tradig was orbidde; god
ad sier oramets cod ot be sod priate. God
ad sier miig did ot eatre i te ecoomic paig
process ad iestmet i te idstr was er imited.
reforms 1979-1999
As te Ciese ecoom etered a ew pase i 1979
wit Deg Xiaopigs Ope Door Poic, tis ew poic
aso igigted te probems o imbaaces betwee te
spp ad demad o bot god ad sier. It is certai
tre tat, drig te ate 1970s ad ear 1980s, Cia
was ot a arge prodcer o sier. Tis was a case or
cosiderabe cocer i te State Coci at te time,
wic te decided tat i order to spport Cias
idstriaizatio ad to moe towards se-sciec, oca
prodctio eeded to be expaded.
I Je 1983, te State Coci reeased te Regatios
o te Peopes Repbic o Cia o te cotro o god
ad sier, wic regated te prodctio, prcasig,
distribtig, maactrig, sig, reccig, import
ad export o god ad sier, wit te PBOC gie soe
resposibiit or settig prices ad big ad seig
sier. Faorabe poicies were aso istitted to ecorage
exporatio ad deeopmet, ad as a rest ma
primar sier resorces were idetied ad seera ew
mies were deeoped.
As a rest o tese measres, prodctio icreased rapid
trog te 1980s. A mber o arge primar sier mies
were brogt o stream, sier ric base metas operatios
were deeoped ad smeter ad reig capacit was
pgraded to aciitate eciet extractio. It is or iew
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Supply
Mie Prodctio 52.9 58.8 63.2 67.6 75.9 79.3 84.8 86.8 94.6 104.6
From Imported Cocetrates 20.4 30.8 52.1 68.3 70.4 131.7 150.3 146.2 147.2 136.9
Od Sier Scrap 11.8 13.1 15.2 17.5 20.4 22.5 22.7 25.3 29.2 31.9
Bio Imports 9.0 14.7 12.2 17.6 30.0 22.6 14.3 22.1 13.0 8.1
Total Supply 94.2 117.3 142.8 171.0 196.7 256.1 272.1 280.4 284.1 281.5
Demad
Fabricatio
Idstria Appicatios 37.7 42.6 47.2 52.9 58.2 67.5 78.0 73.1 84.4 88.5
Potograp 5.7 5.8 6.1 5.4 5.0 4.6 3.7 3.1 2.6 2.4
Jewer 17.5 20.7 24.0 26.7 30.3 34.3 36.1 40.0 46.4 54.4
Sierware 4.3 5.1 6.3 7.2 8.4 9.1 8.7 6.9 7.6 8.3
Cois & Medas 2.1 2.3 2.3 1.8 1.6 2.6 2.8 3.0 3.7 5.8
Tota Fabricatio 67.1 76.4 85.9 94.0 103.6 118.1 129.2 126.1 144.8 159.5
Psica Bar iestmet - - - - - - 0.3 1.3 6.1 11.3
Total Demand 67.1 76.4 85.9 94.0 103.6 118.1 129.5 127.3 150.9 170.7
Bio Exports 43.5 92.9 77.2 97.5 155.9 144.2 134.4 117.1 45.4 37.9
Implied Stock Changes (16.4) (52.1) (20.4) (20.5) (62.8) (6.2) 8.2 36.0 87.9 72.9
Sorce: Tomso Reters GFMS
ChInESE SIlvER SuPPly AnD DEMAnD (MIllIOn OunCES)
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tat Cia was amost certai a srps prodcer o sier
b te ed o te 1980s ad te remaied so i te 1990s.
B te mid-1990s ad more ta 15 ears ito reorm,
oweer, te Ciese ecoom was o oger a cosed
sstem, ad ocia god ad sier poic ed to icreasig
diemmas or te atorities. For exampe, as te grap
aboe sows, tere were at times extreme arge price
disparities betwee te PBOCs big/seig price ad
te iteratioa price ad tis was a power icetie
to eiter se direct ito te oca market, to export
ocia, or to bid stocks ti more aorabe prices
emerged. uocia fows betwee hog Kog ad
maiad Cia oer tis period was jst oe o te mriad
dicties or te goermet ad te compicated ad
opaqe price ad tax strctre i particar seemed to
ae restricted growt i te sier idstr.
neerteess, tere was a degree o decisio makig
parasis, ot east o a becase te PBOC was
costraied at tat time b te State Coci (wic ad
deegated te task o maagemet o bot metas to
te Cetra Bak). B 1997, te PBOC was aware tat
its stocks o sier were more ta sciet or Cias
ow abricatio eeds, ad so bega a period o beig
egect, refected i te act tat te ocia big
ad seig price was et caged i spite o massie
moemets i te iteratioa price. I eect it tred
ot tat sier was see b te atorities as te meta
trog wic to test te process o deregatio. As
a direct rest o te sot approac to sier market
deregatio, pbic data ad ocia commetar drig
tis period was rare.
liberlization 2000-2012
I 2000, as part o arios market reorm measres,
te sier market a bega to be iberaized. I a
importat deeopmet, Cia eded its 50-ear state
moopo o sier tradig at te start o 2000 ad
te Sagai hatog noerros Meta Woesae
Marketpace (sperseded b te Sagai Wite Patim
ad Sier Excage i 2003) was desigated b te
State Ecoomic ad Trade Commissio as te o ocia
tradig patorm or sier i Cia. Iitia, te excage
ad 56 sier tradig members, icdig oerros
metas prodcers, processig rms ad istittioa
cosmers ad woesaers, wit te mber o members
aig sice rise to more ta 200. I additio, te
preios icese sstem o sier woesae ad retai
prodct maactrig (except cois) was aboised.
Te deregatio o te Ciese state cotroed moopo
or big ad seig o sier aso rested i a rapid
expasio o sier exports i te rst a o te 2000s.
Te spp o sier came rom a mixtre o risig mie
prodctio, growt i imported cocetrates wit a sier
b-prodct credit ad, a, a food o spp rom
(most goermet owed) aboe-grod stocks bit p
oer preios decades. As ca be see i te cart aboe,
Cia ra arge sier srpses trogot te 1990s,
wic rested i a rapid accmatio o bio stocks
oer te same period.
Te growt i sier bio exports was istrated b te
rise i te ee o te aa export qotas issed b te
Miistr o Commerce (MOFCOM). I 2000, or exampe,
te qota totaed 13.5 Moz (420 t). B 2007, MOFCOM
issed a export qota or 144.7 Moz (4,500 t) o sier.
PBOC PRICES PREMIuM/DISCOunT TO InTERnATIOnAl PRICE TOTAl SuPPly AnD FABRICATIOn DEMAnD
US$/oz
Source: Thomson Reuters GFMS
PBOC Selling Price
PBOC Buying Price
Premium
Discount
-4
-3
-2
-1
0
1
2
Jan-99Jan-98Jan-97Jan-96Jan-95Jan-94
0
20
40
60
80
100
200019981996199419921990
Millionounc
es
*Including mine production, scrap and imported silver in the form of bullion and
base metal concentrates
Source: Thomson Reuters GFMS
Total Supply
Fabrication Demand
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Wie it is wort stressig tat exports oer tis period
were cosiderab ifated b rod-trippig o sier (see
Capter 6), tere is o qestio tat te ast qatit o
sier sdde eterig te goba market rom Cia
ad a importat impact o te metas price, peraps
especia i te ear part o te 2000s.
Iroica, gie tat sier was te rst precios meta to
be deregated at te start o te 2000s, it is god tat as
made mc o te rig o te excage rot oer te
ast ew ears. Te primar reaso or tis is tax reated,
i particar te vae Added Tax (vAT). At te time o
te ac o te Sagai hatog noerros Meta
Woesae Marketpace i 2000, te mai resoed
probem cetered o te treatmet o vAT (o 17%) o
trades codcted o te excage. Members o te
excage arged or zero ratig, bt or arios reasos a
dea wit te tax atorities was ot strck. Coseqet
tradig omes did ot take o ad it appears as i
most prodcers ad sers o sier opted to trade o te
excage, ad sa wit o vAT, or wit a percetage
o vAT beig paid (it is ot commo to d sers paig
a aerage o 5-6% vAT. Tere is aso a ge market
i receipts wic eabes sers to aoid vAT atogeter).
O te Sagai God Excage (SGE), b cotrast, a
agreemet was reaced o te treatmet o vAT o god
codcted o te excage, ad god tradig omes
ae rise steadi sice its opeig i 2003.
I additio, gie siers ig price oatiit, it seemed
tat te atorities ad bee extreme catios we
cosiderig itrodcig sier paper istrmets to te
geera pbic i Cia. Tereore, sier paper tradig
o became aaiabe to oca iestors o te SGE i
October 2006, wie psica prcases o sier bio
bars were o aowed sice mid-2009 (amost or ears
ater god iestmet bars were itrodced i Cia).
Frtermore, it was ot ti Ma tis ear tat a sier
cotract was eeta aced o te Sagai Ftres
Excage (god started to trade o te excage i ear
2008).
notwitstadig tese probems, it is remarkabe ow
mc progress as bee made i te ast ears. For
exampe, Cias poic sccesses i te sier market are
cosiderabe:
The PBOC has now stood back from its position as
monopoly buyer and seller of silver.
Producers and users of silver can freely buy and sell the
metal (often without paying VAT).
From a relatively small player two decades ago, China
last year became the worlds second largest consumer
and third largest producer of the white metal.
There are currently three exchanges that offer silver
paper trading for private/institutional investors and
silver producers/manufacturers.
The general public is allowed to buy/sell investment
bars and coins.
We oe tiks o te expropriatio o a priate god ad
sier i te Ctra Reotio rom 1966 to 1976, te te
strctra ad ideoogica cage oer te past 30 ears
ae bee tr mometos.
REGIOnAl FABRICATIOn DEMAnD, 2011REGIOnAl MInE PRODuCTIOn, 2011
Source: Thomson Reuters GFMS
CIS
China
Europe
Latin America
Asia
(ex. China)
North America
Oceania
Africa
Source: Thomson Reuters GFMS
Other
China
Europe
India Sub-Cont.
Asia
(ex. China)
North
America
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3. silver supply in china
introduction
Accordg to Tomso Rtrs GFMS aass, tota
Cs spp o sr as jod a rapd growt or
t ast dcad or so, wt oms rsg rom 94.2 Moz
(2,930 t) to 281.5 Moz (8,756 t) btw 2002 ad 2011.
Ts rapd xpaso was d to a combato o, rst,
sbstata coomc growt drg ts prod (GDP
growt as aragd 10% or t ast 10-ars), gtg
dstra dopmt, ad scod, rsg commodt
prcs wc pd accrat xporato, dopmt
ad, tr, m otpt.
Tr ar or ma compots o Cs sr spp.
Frst, m prodcto, wc ast ar rcordd a
cras or t t cosct ar to rac 104.6 Moz
(3,253 t), cotrbtg 37% o t tota. Scod, domstc
scrap spp (cf dstra rccg) as b rsg
stad as Cs dstra abrcato as crasd
rapd, tg spp rom ts sgmt to 31.9 Moz (992 t)
ast ar.
T trd sorc o spp s mportd sr bo,
as crta dstra srs o sr, spca org
opratos wt strgt qat rqrmts, td to
brg mta dspt ts bg mor xps ta
sorcg t oca markt. Atr rsg to a pak o or
30 Moz (930 t) 2006, spp rom ts ara as b o
a stad dcg trd, rfctg major mpromts
t qat o sr bo prodcd Ca (dscsso
o ts ara w b cord Captr 6).
T a cotrbtor o Cs spp, ad t argst
spp sd actor t domstc markt at ar a a
o t tota 2011, s sr rcord rom mportd bas
mtas coctrats, ma a b-prodct o coppr, ad
ad zc prodcto. Tomso Rtrs GFMS data sows
tat rcor o sr rom mportd coctrats as
dd grow rapd sc t brazato o t Cs
sr dstr. Pror to ts sgcat dopmt t
PBOC cotrod ad st t domstc sr prc (ot
sgcat owr ta t tratoa prc) rmog
t ct or a orgazato to sp g sr
cotag coctrats to Ca. Sc drgato,
owr, a mor traspart prcg strctr ad Cas
at apptt or ad, coppr ad zc, copd
wt t xpos dstra growt as s rcor
rom ts sorc pak 2008 at 150.3 Moz (4,676 t).
Tratr, owr, sr rcord rom mportd bas
mta coctrats as b oowg a dcg trd,
atog ts oms as rmad at xcptoa g
s.
mine production
A dcad ago, Ca was a sod md-tr prodcr o
sr, wt otpt 2002 o 52.9 Moz (1,646 t). Ts
pacd t as t ort argst bd t orwmg
domac o Pr ad Mxco, as w as Astraa. Sc
t, rapd ad amost trrptd prodcto growt,
at a compod aa growt rat o 8%, as s ts
postog st to brdg t od ad bcom o o
tr k pars t sr mg dstr.
W t goba proporto o sr prodcd as a b-
prodct o otr mta mg stads at 71%, Ca
ts gr s sbstata gr, wt jst dr 95% o
domstca md sr orgatg as a b-prodct o
otr md mta prodcto. Mc o ts s sorcd
rom ad-zc dposts, wc 2011 accotd or a
stmatd 72% o Cs domstc m spp. Coppr
s stmatd to a accotd or 18%, god or 3%, ad
t baac o b-prodct prodcto to mtas sc as t,
ck ad tgst.
Or t past ars Cs b-prodct sr
prodcto s stmatd to a rs b 37%, or 29 Moz.
W sr prodcto growt as b spportd b a
growg domstc sr abrcato dstr, t mst b
ackowdgd tat mc o t growt sr m
spp as b cdta to ts trd. Ratr, growt
sr otpt as b dr b t d to cras t
prodcto o bas mtas to spp domstc abrcators,
TOTAl ChineSe SilveR SuPPly in 2011
Total Supply: 281.5 Moz
Source: Thomson Reuters GFMS
Mine Production
37%
From Imported
Concentrates
49%
Bullion imports
3%
Scrap Supply
11%
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The Chinese silver markeT - DeCember 2012
a attmpt to rdc Cs rac o mportd
coctrats. Or ts sam prod Cs prodcto
o coppr, ad ad zc s stmatd to a crasd
b 42%, 77%, ad 51% rspct. A asd to t bas
mta stor s t cras sr rcord rom t
growg god mg sctor. Cs god prodcto s
stmatd to a crasd b 50% or t past
ars, wt a assocatd rs t oms o sr
rcord.
Tr ar a mbr o actors bd ts crass
mta otpt. Cotd stmt t Cs mg
dstr b t argr, stat-owd mrs as cotd
to d prodctt ad otpt xpasos, bot trog
t dopmt o w m sts, ad t modrzato
o qpmt ad procsss at xstg sts. Mrgr ad
acqsto actt, cosodatg smar pars amog
t argr dstr partcpats, as aso pad a ro.
Stat-owd mrs ad t argr tgratd prodcrs
gra a bttr accss to crdt rom stat baks,
ad ar ts bttr ab to watr prc oatt ad
adrs markt codtos, abg tm to cosodat
smar pars, or tak addtoa markt sar. Mor
rct w a s domstc mrs ookg orsas or
rsorcs trog mrgr ad acqsto actt to scr
coctrat ad mta spps or mport back to Ca.
W aso stmat tat xporato spdg Ca
rmas atd, wt t argr mrs drtakg
aggrss xporato programs cotr.
T prmar sr mg dstr Ca s mtd
om. For a sr mg t sod b sad tat ad
ad zc ar commo co- ad b-prodcts, ad w r
rqt b bratd togtr rom a dpost. i Ca,
t occrrc o ms tat dr a majort porto o
tr r rom sr (prmar sr ms) ar w
mbr wt ms tat prodc sr ct as a b-
prodct to otr mta mg mc mor sa.
T prcpa prodcr tat accots or t majort o
Cs prmar otpt s t yg mg compx
ha Proc, wc comprss sra drgrod
ms accssd a adt ad dc sats, ad a
coctrator pat. Caada-std Srcorp Mtas as
majort owrsp o t proprts, trog two So-
org jot trs. Most o Srcorps prodcto
coms rom ts assts ad spcca a sg mg
oprato, t SGX t, bt t broadr yg oprato
aso corporats tr otr prmar sr ms ad a
sr-rc ad m. Coctrat prodcto commcd
2006, ad s trckd as a ad-sr coctrat ad
a zc coctrat or trd part procssg ha. i
rct ars paab sr prodcto as b arod 5
Moz (156 t) aa.
ChineSe SilveR Mine SuPPly By SOuRCe MeTAl
(Moz) 2007 2008 2009 2010 2011
Prmar Sr 4.0 4.4 5.0 6.3 6.1
God 2.2 2.3 2.5 2.7 2.9
lad/Zc 56.6 60.0 61.5 66.7 75.6
Coppr 14.9 16.5 16.2 17.3 18.4
Otr 1.6 1.6 1.6 1.6 1.6
Tota 79.3 84.8 86.8 94.6 104.6
Sorc: Tomso Rtrs GFMS
TOP SiX SilveR MininG COunTRieS, 2011
Total Production: 505.3 Moz, 66% of Global Total
Source: Thomson Reuters GFMS
Mexico
Peru
China
Poland
Australia
Chile
ChineSe SilveR Mine PRODuCTiOn
0
20
40
60
80
100
120
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
(tosad tos) 2007 2008 2009 2010 2011
God (tos) 280 292 324 351 371
lad 1,402 1,403 1,604 1,981 2,358
Zc 3,048 3,343 3,324 3,842 4,308
Coppr 946 1,023 1,041 1,155 1,265
Sorc: Tomso Rtrs GFMS, WBMS, iCSG
ChineSe DOMeSTiC MineD MeTAl PRODuCTiOn
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The Chinese silver markeT - DeCember 2012
Domstca owd ad r prmar ms o a
mag sca ar w mbr ad or qrs
arod prmar sr ms ad projcts a sa
ctd modst opos o ts sctor d to tr bg
rat tt ocs o sc assts, dd most bg
pomtac ad/zc domat dposts tat prodc
assocatd sr ad/or god. T c xcpto w ar
awar o s t stat-owd hb Fgg m tat s
gra rgardd as a prmar sr m. W stmat
t as prodcd arod 0.6 Moz (20 t) aa rct
ars.
Prmar sr prodcto costs or ms wt t yg
compx, t SGX ad TlP ts, atr t owr
qart o t dstr cost cr ora. idd, taks
to ad ad zc crdts (b-prodct accotg) SGX
as rportd gat sr cas costs or sra ars.
howr, t XBG m, a sma oprato aso ha,
s postod ss comptt at t ppr d o t
cost cr, part, w b owg to ts comparat
smar sca o mg ad procssg opratos.
ndss to sa, g t mtd popato o Cs
prmar ms ad tror tos atrd t goba
aass, cato sod b xrcsd bor attmptg
to graz tat tpca Cs sr mg costs ar
spca ow rat to t tratoa pr grop.
mininG outLooK
Prodcto rom prmar sorcs Ca s xpctd to
cras strog or t xt w ars as prodcto s
razd rom w projcts. notab, t yg oprato
comptd a m xpaso md-2012, takg stad
coctratg capact rom 2,500 mtrc tos pr da
(tpd) to 3,200 tpd o or. Frtr ot, tr ar a ad
o possb dopmt projcts, cdg two adacd
projcts Gagdog: Srcorp s costrctg t
1,600 tpd Gaocg m ad m ad targtg rst
prodcto 2013. Mco Sr adacd ts 90% owd
Fwa projct to asbt stag 2009 ad ag
rasd ac, s crrt at t prmttg stag or a
3,000 tpd drgrod sr-ad-zc m ad procss
pat, wc s targtg a 2014 start. Stad stat sr
prodcto cod b 5.5 Moz (170 t) pr ar. Som prmar
sr dposts aso occr ir Mogoa, wr Sr
Drago Rsorcs rct rportd som g grad dr
ts o xporato proprts atog ts w k b
a og trm proposto or w.
Wt rgard to Cas god dstr, prodcto t
rst sx mots grw b a stmatd 7%. For t -
ar, ad to 2013, w xpct god otpt oms to
cot to cras, prmsd o rtr cosodato
SiLver occurrenceS in china
T goog o Ca s crta prospct or xporato
sccss. Sr occrs mra assmbags ard googca
sttgs, ad s sa od cojcto wt otr mts
sc as ad (Pb), zc (Z), coppr (C), t (S), atmo (Sb),
tgst (W), god (A), bsmt (B) ad mrcr (hg), wc ar
xtractd at t smtg ad rg stags to orm a aab
co-prodct. Som o t ma occrrcs cd:
Marine volcanic sedimentary rocks hosting massive sulfde
Pb-Zn-(Cu)-Ag ores and stratiorm Ag-(Au) ores.
Continental volcanic sedimentary rocks containing
polymetallic silver veins and/or stockworks and Ag-(Au)
veins in pyroclastic rocks.
Rocks aected by metasomatic processes including W-Ag
quartz veining, Pb-Zn-(Cu)-Ag skarns, Sn-polymetallic-Ag
ores and Ag-(Au) veins in altered carbonate rocks.
Metamorphic-intrusive rocks, principally Ag-(Au) veins in
shear zones.
Sedimentary rocks including stratiorm Pb-Zn-Ag ores in
carbonates, silver bearing manto deposits and Cu-(Ag)
layers in red sandstones.
Gossan type ores ormed rom weathering.
Ts or dposts wr ormd, as a grasato, rom tr
t procss o orogss (mota bdg) or rom prods o
trs ad xtrs ocasm, rstg t coctrato
o or mras rom mta rc fds wt t crst. T ard
atr ad qatt o ts dposts s tstamt to t og
googca stor o t Cs trras, gg amp tm ad
opportt or ts coctrato ts to occr: rocks a
b od Ca datg approxmat 3.8 bo ars
ag. it sod aso b bor md tat Ca rprsts arod
6% o t goba admass, ad tror tr s a arg ara o
prospct trra or t Cs Googca Brgads to xpor.
T utd Stats Googca Sr stmat tat at d-2011
Ca ad t t argst rsrs o sr wordwd, at 1,382
Moz (43,000 t), bd Pr, Poad, C ad Astraa. it
sod b rmmbrd tat ts s a damc gr, sbjct to
statstca rassssmt, addtos trog xporato sccss
ad rdctos rom dpto trog mg. W wod b
skptca o sggstg, owr, tat t Cs sr rsr
bas as b acg t dpto or rct ars, g
ogog xporato orts -cotr copd wt t strog
prc prormac o sr or t past tr ars, wc w
crta mak t mta a crasg attract xporato
targt ts ow rgt, as w as a mor mportat co-prodct to
bas mta ad god xporato.
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The Chinese silver markeT - DeCember 2012
ad modrsato o t cotr s domstc opratos,
agast a backdrop o atd god prcs, wc w
cot to cts ts actt. W orcast sr
rcord as a b-prodct o god mg actt to
cot to grow cocrrt.
natoa data rom or t rst s mots o 2012
dcats md coppr otpt s p b or 12% ar-o-
ar. Ts mps tat aa prodcto w rac or
1.5 mo tos o md coppr, a cras o 16.5%.
howr, wt w otr major projcts scdd to
dr or t xt two to tr ars, t rat o growt
s sbsqt xpctd to sow rom crrt s,
towards 2-3% pr am. T xtt to wc growt
ca b matad w b fcd part b t coppr
prc ad a wakg cod s spp rom marga
opratos bcom protab, wt a cocrrt mpact
o sr sorcd rom domstc coppr ms.
Sgcat oms o ad ad zc capact a
cotd to b addd ts ar 2012, ad w xpct
growt ad ad zc prodcto to amot to 27% ad
20% rspct. Combd wt or orcast or gr
arag prcs 2013, w xpct otpt growt to rma
dob dgt trrtor or xt ar as w. Sbsqt
to ts, atd growt rats ar orcast to b matad
or t oowg sra ars, as mpd b Cas 12t
F-yar Pa wc prodd gdac o coomc poc
or t prod 2012-2015, as t prtas to t domstc
o-rros mtas dstr.
Takg ts otooks togtr, w xpct tat, k
prmar sr, t s o b-prodct sr rcord
rom t coppr, ad/zc ad god sctors w, as a
grop, cras 2012 ad 2013.
production From concentrateS and
reSidueS
Trg to t sr smtg dstr Ca, g t
arg oms o ad prodcto Ca, ts ctrs
most arod t procssg o bot domstc ad
mportd ad coctrats, ad t rprocssg o
prcos mta barg aod sms rom bas mta
smtrs, wc aso s bds o domstc ad mportd
dstock.
i som stacs, or cotacts a ormd s tat most
o t prot marg wt t bsss o r-procssg
aod sms ad otr rsds as b rom gas
sr prcs ad t rcor o mor mtas (wc ot
ma ot b a paab mta t rg cotract), ratr
ta rom t rcor o rsda bas mtas.
howr, d to srs mprss prc prormac
t ast cop o ars, a growg mbr o bas mtas
smtrs ow td to r-trat sr-barg aod sms
tmss stad o sg tm to trd parts. Ts
s car xprssd b or cotacts yogxg Cot
(ha Proc), wc cas ts t sr capta
Ca, wr aa sr otpt s rportd to a
totad 67.5 Moz (2,100 t) 2011 (tog w b t
oca mbr s fatd b sgcat dob cotg).
Bass or ormato, t bk o sr prodcto ts
ara, or ma ars, coms rom bas mtas sms,
ad partcar. W t xpaso o t bas mtas
sctor as s otpt rom ts rgo post robst gas
or t ast dcad, smtrs tat w a spok to
tat rgo amos dcatd t crasg dct
o sorcg aod sms ad sags rom major bas mtas
prodcrs. i addto, as t orwmg majort o
PRiMARy SilveR CASh COSTS (2011)
US$/oz
-10
-5
0
5
10
15
20
25
30
35
40
US$/oz
Source: Thomson Reuters GFMS
0 10 20 30 40 50 60 70 80 90 100
-10
-5
0
5
10
15
20
25
30
35
40
2011 Average Silver Price ($35.12/oz)
2011 Total Cash Cost (Average = $8.07/oz)
Cumulative Production %
XBG
TLP
SGX
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12
The Chinese silver markeT - DeCember 2012
ts oca smtrs ar prat owd, tgt crdt mts
rom stat baks ad tr xposr to oat sr prcs
a rstd a sarp dc prot margs.
T dstr aso procsss som sr barg dor rom
god ms. i ts cas, t smtg dstr ctrs o
t argr, stat r tgratd trprss, wc ma to-
trat matra o ba o smar prodcrs addto to
tr ow md otpt.
Frtrmor, t gormts atst F-yar pa, o
o t ams was to cot to promot tgtr rgato
ad stadards romta cotros. i partcar
t mtod two targts: to rdc rg ad carbo
doxd tsts b 16% ad 17% rspct, ad to
ct t dscarg o ma potats b 8-10%. Wt
ts ramwork o gratr rgato o mssos ad
dscargs, w xpct ts to pac addtoa prssr o
t Cs smtg dstr to rtr modrz.
i sc a stato, w xpct tr to b cotg
cosodato t bas mta smtg spac Ca,
as smar compas, wc ma ack t as accss to
crdt or cas to rrbs or rtrot tr opratos, ar
absorbd b argr compas, ma o wc addtoa
boast rg acts, prodg t adatag ot o
o sca, bt o rtca tgrato. largr, stat owd
compas ma aso a asr accss to crdt rom
domstc baks d to tr qas-gormt stats,
wc as t addtoa bt o prodg som
sato to cas fow agast somtms oat mta
prcs.
Tota sr otpt Ca was stmatd b
t Ca norros idstr Assocato to
b 397.0 Moz (12,348 t) 2011, a cras o
jst or 6% ar-o-ar. W ookg at
som o t rportd prodcto oms rom
bas mta smtrs, ts ma ot rfct t
scop o t stato. i or ast rport o
t Cs sr markt, prodcd 2005,
w otd dc xsts o dob cotg o
statstcs or sr prodcto Ca, ad
som cass, dr-rportg. W b ts s
st t cas, prmar as a rst o dscssos
drg o-t-grod d rsarc. it s wd
ackowdgd tat t gr o tota rd
prodcto ctd b gormt agcs as
sgcat scop or trprtato. Spcca
tat tr ar k to b stacs o dob
cotg o tota sr otpt across t
m, smtr ad rr s. i addto, ts grs
ca cd t rccg o scodar matras sc as
ctroc scrap, ad potta t pgradg o sr
bars btw o rr ad aotr.
Praps most mportat, ts tota otpt masr
appars to ot drtat btw t aros sorcs
o rr dstock sorcd at domstc ms rom tat
sorcd rom mportd sr-barg m prodcts. Ts
rprsts a damta drc wt Tomso Rtrs
GFMS mtodoog, sd across or mg rsarc,
wrb md prodcto s attrbtd to t cotr o
org o or, ratr ta t cotr wc matra
s smtd/rd. Rd prodcto s aatd
sparat as part o t baac o trad fows wc ds
to or assssmt o spp ad dmad at t cotr
.
Car Ca s ot ao ts ro as a prcasr o
dstock rom tratoa sorcs. T coctrat
trad s a w stabsd goba bsss ad os t
sppg o sbstata oms o matra or smtg
at acts across east Asa gra. eswr, a w
mor spcc xamps o sc fows cd: coctrats
sorcd Rssa wc ar procssd Kazaksta,
Astraa coctrats procssd to sr mta
ida, ad Astraa crd ad bo sppd or
rg t utd Kgdom. Frtrmor sr barg
dor s rot trasportd or rg aotr cotr
to tat o t m rom wc t orgatd. D to t
atr o t Cs dstr, bg r ragmtd ad
opaq atr, drg a bottom-p srs or Cs
sr prodcto s tror r dct. i ordr to
ss-cck a rastc stmat or Cs domstca
md sr, w b t s o t tmost mportac to
TOP 10 SilveR PRODuCeRS in ChinA
(Moz) 2007 2008 2009 2010 2011
ha ygag God ad lad Grop 18.3 19.4 19.7 19.5 22.3
Jagx Coppr Corporato 11.6 13.1 13.9 14.5 16.4
ya Coppr Co. 17.5 10.9 10.0 11.3 15.2
ha Czo Jg Sr idstr Co. 13.2 9.6 10.2 8.4 14.5
ha Ja J God ad lad Co. 8.4 9.0 10.7 11.4 13.8
Togg no-Frros Mtas Grop 3.1 5.3 10.0 13.1 13.3
hb Da no-Frros Co. 8.1 8.4 8.7 10.9 11.3
ha ytg no-Frros Mtas. Co. - - 11.5 9.2 10.9
ha Skosa no-Frros Co. 8.9 9.5 9.6 7.7 7.3
SZ Zogj lga nomt Co. 6.0 4.2 4.1 5.1 7.3
Otr 197.3 218.8 224.4 262.5 264.7
Total Supply 292.3 308.2 332.7 373.5 397.0
not: Sr prodcd rom bot domstc ad mportd coctrats.
Sorc: Atak
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The Chinese silver markeT - DeCember 2012
mak a assssmt o t qatts o sr mportd
rom org-sorcd coctrat tat s mpct cdd
oca prodcto statstcs o sr.
T Cs markt or mportd coctrats s
domatd b fows o coppr-barg matra. lookg
at t trad o t major bas mta coctrats rat
to t sr markt (coppr, zc ad ad), accordg to
cstoms data, coppr coctrat comprsd 59% o t
gross wgt o ts mports 2011, oowd b zc
(27%) ad a ad (13%). howr, w cosdrg
sr fows wt ts spmts, sr grad (ad to
a ssr xtt, procss rcor) s pota, as otd
bow.
Aatca srcs compa Ax Stwart itratoa
prodd Tomso Rtrs GFMS wt a rag o sr
cott data rom bas mta coctrat assas across
a rag o adg cotrs tat sp coctrats to
Ca. Or mtodoog to stmat ts fows o sr
cotad coctrats to Ca was basd o ts
assa ormato cojcto wt mport data ad
proprtar stmats or tpca rats o procss oss or
dowstram procssg o sr assocatd wt coppr,
ad ad zc. Grads o sr ma ad coctrats
ca b xcptoa g, ragg rom a w drd to
sra tosad grams pr to (g/t). B cotrast, coppr
coctrats mgt grad rom 100-1,000 g/t wt zc
mor tpca rom 50-300 g/t rag. it s or opo
tat ma o t gst (sr) grad coctrats ar
ot sppd to Ca owg to t vAT strctr, dscssd
atr. T data o coctrat grads dcats to s tat
tota sr mportd ad dd rom ad coctrats
as b broad smar to tat rom coppr, som ars
rprstg t adg sorc o sr rom coctrats
mportd to Ca, cdg ast ar, at arod 68 Moz
(2,100t), ot o tota rcorab mports o 136.9 Moz
(dr 4,259 t).
Tr ar a mbr o rasos or ts skw o sr
cotts bg aor o ad. it s sa or ad-zc
ms or pomtac ms o mag sca to dsg
t procss fowst to prodc two or mor coctrat
strams ratr ta a sg bk coctrat wc
a paab mtas ar cotad. B dog ts, otak
ca b gotatd wt mtp smtrs/rrs bst
std to ad ac rspct stram, t trsts o
acg bttr pa s agast t cotad mta.
Psca rcor o sr trog zc procssg prsts
mor cags ta or rcor rom ad smtg, ad
tror acts rats o pamt smtrs ar prpard
to or prodcrs agast cotad sr. upstram, at
t coctrator stag, sr sd mras (sc as
argtt, Ag2S) ar cmca smar to, ad w most
commo assocat wt, ad sds (sc as gaa,
PbS) or zc sds, most otab spart ((Z, F)S).
Cosqt, t s orma or sr sd mras to
rad rport to a ad coctrat stram t fotato
procss as a mattr o cors. Bt g tat mor
aorab sr pamt trms arab xst or ad/
SilveR FROM ChineSe COPPeR COnCenTRATe iMPORTS
SilveR FROM ChineSe leAD COnCenTRATe iMPORTS SilveR FROM ChineSe ZinC COnCenTRATe iMPORTS
0
10
20
30
201120102009200820072006
Millionoun
ces
Source: Thomson Reuters GFMS
South Korea
Australia
Peru
Other
Mongolia
Kazakhstan
0
10
20
30
40
50
60
70
80
90
100
201120102009200820072006
Millionoun
ces
Source: Thomson Reuters GFMS
Russia
United States
Peru
Other
South Africa
Mexico
0
10
20
30
40
50
60
70
80
90
100
201120102009200820072006
Millionounces
Source: Thomson Reuters GFMS
Chile
Mexico
Peru
Other
United States
Mongolia
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The Chinese silver markeT - DeCember 2012
sr coctrats ta or zc/sr, fotato pat
procsss w b rtr optmzd to sr t maxmm
proporto o sr rports to a ad stram wt sr
rportg to a zc stram to b mmzd.
it sod b rtratd tog tat w ts s rcordd
as Cs prodcto b t domstc statstcs agcs,
t Tomso Rtrs GFMS mtodoog s to attrbt
ts prodcto to t m st ad cotr o org o
or. itrstg, t growt o ts major sorc o sr
to Ca as casd or t past (or) ars, oowg a
prod o xcptoa growt rom t brazato o t
markt t 1980s trog 2008. idd, sc t, b
or stmato, compot o Cs sr as cotractd
b 9% sc 2008.
O mportat actor tat as rstrctd growt
mportd bas mtas coctrats rct ars rats
t tax ss ad prc drcs btw oca ad
tratoa markts. As mtod arr ts rport,
sc t brazato o t Cs sr markt, a
sr trasactos ar sbjct to 17% vAT Ca. i
otr words, oca smtrs d to pa 17% tax o sr
cotad mportd coctrats (tpca basd
o tratoa prcs). howr, as domstc prcs
(xcdg tax) a b tradg cosstt owr
ta t tratoa prc, t s ot srprsg tat oca
smtrs td to prr ow sr cott mportd
coctrats. it s wort strssg r tat sr prcs
qotd o commodt xcags Ca a arad
cdd a 17% vAT. As sc, w t pbsd sr
prc Ca ma sm to od a sma prmm or
t tratoa prc, t s wrog to cocd tat oca
compas cod bt rom sr rcord rom
mportd coctrats.
Back to t md-2000s, dspt t owr domstc prc,
osss wr aodd as oca sr prodcrs ad tradrs
cod gt a 13% vAT rbat o t a o t sr
xportd. Moror, ts ct was xpotd b crta
tts tat gagd rod trppg o sr btw
maad Ca ad hog Kog, wc sbsqt
gratd cosdrab prots. Ts, aog wt t rapd
xpaso o t bas mtas sctor, d to a sarp rs
coctrat mports to Ca or t sam prod.
howr, as t sr tax rbat was rdcd to 5%
2007 ad t rmod t oowg ar, t ct
to brg sr rc coctrats as rdcd cosdrab.
Scrap
Aazg Cs scrap spp as awas b a dct
task ot ast bcas o t ragmtd atr o t
bsss. Obtag rab data as b cagg
g t gograpca sz o Ca ad ot rmotss
o t dstra ctrs wc ar sprad ar ad wd
across t cotr.
Tomso Rtrs GFMS stmats o sr scrap
ra a rapd accrato spp or t ast
dcad. i ssc ts as cf b t rst o
t trrptd srg coomc growt (Ca GDP
growt as aragd 10% or t ast 10 ars) wc as
stmatd dstra xpaso, wt t at rs
rcor t bt o mass stmt rastrctr
ad dstra otpt.
i 2001, Cs sr scrap spp was ss ta 10 Moz
(310 t). Sc ts pot scrap as rs mor ta tr-
od as dstra abrcato as rapd crasd racg
31.9 Moz (992 t) 2011. Sr rcor or ts tm
as ma orgatd rom sd m, scrap capactors
ad sd comptr ad cotact matras. Moror,
t ast w ars tr as aso b a otab rs
spp rom spt t oxd (eO) catasts sd t
prodcto o dtrgts, sots, pastcs, ad aros
orgac cmcas sc as t gco.
i addto to domstc spp tr as pros aso
b a cotrbto rom mports wc prmar took t
orm o ctroc scrap (e-scrap) rom t dstrazd
word. Atr brazato o t sr markt 2000
ts opd t door or a srg mports as org
compas ookd to captaz o t capr procssg
costs. Cs atorts mod to stop ts practc
2002, ct bag mports o ctrca tms sc
as tso sts, comptrs, potocopg macs,
do camras ad tpos d t g o
azardos wast. Addd compcatos cocrg
mportd scrap, spca o ctrocs org, ar rst,
wtr t matra s acta r-sd or g
scrappd, ad scod, jst ow mc g grad
matra s acta sppd . W tr as b
masr trodcd to rdc ts trad t appars t
som e-wast rom org cotrs s st trg Ca,
som trog oca cas ad som rportd a
oca mas.
lookg brf at rct scrap s ras spp as
rs at arag o 12% or t ast tr ars. Ts
oowd a fat rst 2008 as dstra abrcato
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The Chinese silver markeT - DeCember 2012
oms tat ar wr actd b wakr xport dmad
as wstr markts t t rst acts o t aca
sowdow. Sc t, owr, sr scrap as rs
stad, wt domstc cosmpto gas pg to ost
osss t xport trad. idd, t rapd growt o
Cas mdd casss ad rbazato o t cotrs
tror as stmatd dmad or ctrca ad ctroc
prodcts o t om rot, rtr boostg rccg
oms. i addto, ast ar t Stat Admstrato
o Taxato ad Mstr o Fac trodcd w
gsato tat w rdc or mat a-addd tax
(vAT) brds o trprss tat rcc wastd rsorcs
drg prodcto a bd to rtr promot t cotrs
crcar coom tat maks dstra maactrg
mor romta rd. i trms o sr rcor,
t 50% vAT rbat o ctrca ad ctroc osod
appacs sod prod t patorm or a gratr
rccg o ts prodcts.
lookg aad, w xpct ogog dstra scrap
growt to ost t dc xpctd rccg rom t
potograpc dstr. idd, t mgrato to dgta
camras ad otr assocatd tcoog as arad
ad a sgcat mpact o sr ad rcord rom
cosmr m ad potograpc papr ad s k to
s rtr as tr ars. W bot o ts
aras o spp ar ot gra prc sst ad,
t cas o dstra rcor, kd cosr to coomc
growt, spp rom rccg o jwr ad srwar s
ar mor prc astc. i, as xpctd, sr prcs mo
gr 2013 t w wod xpct a rs spp rom
ts sgmt as sr assts ar tasd ot to grat
prots. logr trm w wod xpct Cas sr scrap
spp to cras wt coomc growt. W
sowg sgt ts ar Ca s st to st dr at
GDP growt ad wt xpctato o rtr coomc
adacmt comg ars spp rom ts sorc
sod cot to rs.
Government StocK SaLeS
As w strssd Captr 2, pror to t brazato o
t sr markt Ca wc startd 2000, a sr
prodcd was oca rqrd to b sod to t Pops
Bak o Ca (PBOC). Dspt a szab om bg
sod oca b prodcrs ad sbsqt xportd,
t s bd tat mc o t xcss spp was smp
stockpd.
T rst sgs o ts cagg occrrd t md-1990s
w t was dcatd to s b t PBOC tat t o
ogr wsd to prcas a mor sr bcas o wat
t prcd to b sct, ot xcss, stocks. T
rst xporator sas rom ts oca stocks startd
1998 ad t ros sarp t oowg ars, as t
Cs sr markt startd to braz. At t sam
tm, fows rom wat w a trmd qas-oca
stocks (tpca d b smtrs ad mrs bcas tr
was tt opportt cost to tm o odg d stocks)
bga to pck p.
Atr car aazg t k mts o t Cs
sr spp/dmad qato, or stmat sows tat
t gormt stock sas rom Ca tota amost 350
Moz (10,880 t) rom 1998 to 2006, accotg or mor
ta 4% o t goba sr spp or t sam prod.
From 2007 owards, owr, w ar codt tat t
PBOC as stoppd drg a matra sas to t
markt. i ssc, ts s d to t act tat, oowg
sra ars o a sas, t cotrs sr stocks a
arad b rdcd sgcat rom xcss s,
ad rmas stocks w pa som part drsg ts
rsr portoo awa rom uS doars.
ChineSe neT GOveRnMenT STOCKS SAleSChineSe SCRAP SuPPly
0
5
10
15
20
25
30
35
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
0
10
20
30
40
50
60
70
80
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
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4. SILVER FABRICATION DEMAND IN CHINA
iNtroDUCtioN
Sic th ibaiati th Chis siv makt at th
stat 2000, siv abicati ma has w at a
ava aua at 12% thuh t 2011, with tak
isi m 48.7 M (1,514 t) t 159.5 M (4,960 t) ast
a. This is i stak ctast t th st w wh
siv abicati i act pst a ub-iit a v th
sam pi.
Chis abicati ma siv cms m a
umb aas, th mst imptat bi iustia
appicatis which hav w siicat v th past
tw cas a ast a accut 56% tta
Chis siv abicati. Th sc ast suc
ma is siv jw w b sivwa, bth
which hav as pst succssiv c hihs i
ct as, chif u t st wth i mstic
csumpti a xpt ma. Ath aa that
has j hath ais is cis & mas (th t i
this smt wi b iscuss i tai i Chapt 5). I
ctast, th us siv i phtaph has xpic a
cii t sic 2005.
B viwi ach cmpt, it is wth stssi
that it has at tims b chai t spaat ut
mstica abicat siv pucts m ths
impt. F xamp, th siicat icas i th
assmb busiss i Chia has taitia b m
impt itmiat pucts, thuh this has vv
i ct as, with a icasi vum cmpts
Chias assmb iust w bi puc
mstica m siv bui. This has t t cu
th statistica pictu a has th a t th
uctait stabishi iab wth stimats
siv ma.
iNDUStrial aPPliCatioNS
Chis iustia abicati has pst a
uitupt wth (with th xcpti a ip i 2009)
m tha 20 as, cimbi m 12.9 M (401 t) i
1990 t 88.5 M (2,754 t) ast a. This ais its sha
ba siv iustia abicati m a m 5% t
18% v th sam pi, vati Chias psiti t th
ws sc ast iustia abicat at th Uit
Stats.
Th mai ivs this utstai pmac hav
b icasi iastuctu xpitu i Chia a
a massiv is i iust utput, which hav bst
csumpti iustia mtas. Mawhi Chia has
as b ab t capitai its a a w wa
wkc, which has th bt m sh
catis m hih-cst cts. I aiti,
icasi p capita icms hav it mstic
csumpti csum uabs a ctics
pucts.
lki aha, spit th cmic wth i Chia v
th ast tw cas, its ubaiati, which is cs
ik t miati a iustiaiati, is sti at
a ativ w v. As a pcta th tta, th
uba ppuati xc 50% i Chia th st
tim ast a, cmpa with 80% i oeCd mmbs. I
i with this, Chis p capita csum spi sti
mais w i cmpais t ma matu cmis.
Th utk siv us i iustia appicatis
i Chia th ctius t b quit pmisi, as
mstic ma siv-bai pucts, such as
autmbis, psa ctic pucts a whit s
is cast t maitai st wth.
CHIneSe SIlVer FABrICATIon deMAnd In 2011 CHIneSe IndUSTrIAl FABrICATIon
0
20
40
60
80
100
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMS
Brazing Alloys and Solders
Other
4
6
8
10
12
14
16
Annual GDP
Growth %
Electrical and Electronics
Total Fabrication Demand: 159.5 Moz
Source: Thomson Reuters GFMS
Industrial Applications
56%
Jewelry
34%
Coins & Medals
4%
Silverware 5%
Photography 1%
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Bsis this, th i iastuctu ivstmt b th
vmt mas that siv us i th cstucti
sct wi is uth, athuh wth is ik t as i
cmi as cmpa with th pvius ca, i i
with th hih bas a i ts b th vmt
t cub spcuativ a stat pjcts. Fia, iv a
api icas i ab csts, catis m vp
cutis t Chia is ik t sw csiab v th
xt w as, athuh this wi b patia st b th
ctiu fw busisss it Chia i t bt
m ict accss t th ca makt.
I tms th spcic ata sis, Thms ruts gFMS
hav taitia bk w Chis iustia ma
it th mai k catis cvi, ctica a
ctics, bai as a ss a th (icui
battis, a chmicas). each is iscuss bw i m
tai, but t usta thi ativ imptac th
tab bw shws u stimats ach cat v th
past ca.
eleCTrICAl And eleCTronICS
Th ba ctica a ctics sct t
accuts th ast sic ma i th iustia
i Chia, but has j bust wth v th past
ca, isi m 17.1 M (532 t) i 2002 t 40.0 M
(1,243 t) ast a.
K t this impssiv pmac has b a api
xpasi i th cut s smi-cuct sct which
pst a ava aua wth w abv 20% m
2001 t 2011, cmpa with 5% ist b th ba
smicuct iust v th sam pi. Th massiv
utpmac was pimai a ucti st ais i
mstic csumpti cup with isi xpt ma
(twithstai a stback ui th ba cmic
wtu i 2009).
lki at th iiviua scts i m tai vas a
simia patt wth acss a a appicatis. I
paticua, a su i c ph a cmput pucti
it Chis utput t accut ast a t abv 70% a
90% spctiv th ba tta. This was i aiti
t a siicat is i ma th psa ctic
s, with th atst aa wth witss i
tbks, tabt cmputs, a led pucti
us i led-backit lCd tvisis. Uik sm wst
makts which a achi satuati pit i tms
th csumpti ctic pucts, Chia is w
bii t accss ths m aab puct as.
Futhm, i ma istacs, ctic itms hav a
imit sh i, m imptat, a sht ashi i,
with ma csums ctiua upai thi pucts
as w ms bcm avaiab.
gwth i th ma ctica ctacts withi th
autmtiv sct has as t a siicat icas
i tak. Chis vhic pucti has w at a
stai at i th ast ca m amst 3 mii
iht ut vhics i 2002 t 17.3 mii ast a, with
pspcts uth st icass i wa. ov
th ast w as, i cic, sat a cmt
staas cas hav b upa siicat, a
with ths upas th is a wi vhics
leAdIng MAnUFACTUrerS SHAre oF IndUSTrIAl FABrICATIon
0
5
10
15
20
25
30
201120001990
Source: Thomson Reuters GFMS
%o
fTotalIndustrialFabr
ication
China JapanIndia
Europe United States
CHIneSe SIlVer FABrICATIon
(mii ucs) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
ectica a ectics 17.1 18.8 21.0 23.5 25.8 31.5 35.5 31.3 38.4 40.0
Bai As a Ss 12.2 14.4 15.8 17.8 18.8 20.7 25.4 25.9 28.0 29.9
oth 8.4 9.4 10.4 11.6 13.6 15.3 17.1 15.8 18.0 18.7
Tot 37.7 42.6 47.2 52.9 58.2 67.5 78.0 73.1 84.4 88.5
Suc: Thms ruts gFMS
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with ctica a ctic cmpts t ct,
xamp, chassis mvmts, sti, cmmuicatis,
cmt a sat vics. Mst imptat, thuh,
csums a icasi mai vhics with th
hihst spcicati vs su, cimat ct a
uctia autmati (such as ctic mis a hat
sats). A umb ths mus us siv-ctaii
cmpts, such as thick m ik tacks switchs/
ctacts. This mais a smt that has iv
si wth (i tm siv tak) i th ast ca
a shu ctiu t xpa as th mstic cm
avacs.
Ath sct that is wth hihihti is th tab is
i Chias phtvtaic (PV) pucti capacit, which has
sut i a su i ma siv past. Itsti,
athuh ba sa-c pucti is w havi
cctat i Chia, th mstic PV iust has,
ma as, i impt siv pw (picipa
m th Uit Stats a Japa), u t stit
quait quimts. Whi this ctius t b th cas,
m ct w hav s th mstic pucti
siv pw th ca PV iust is. I u viw,
this susts that Chis siv abicati th PV
iust wi stat t is appciab, as pps t th
cut situati, wh th us impt siv past
ctibuts t Chis siv iustia csumpti, ath
tha its abicati ma.
BrAzIng AlloyS And SolderS
Chis ma bai as & ss has as
pst a twth icas v th ast 10 as. Fm
12.2 M (380 t) i 2002, Chis tak m tha
ub v th 2000s, hitti a w c hih 29.9
M (929 t) ast a, with its ctibuti t th ba
tta isi m 29% t 48% v th sam pi.
Cucia t this has b st mstic gdP wth
a w ab csts, which tth hav ctibut
twas Chia bcmi th ba mauactui hub
a vast umb pucts, such as whit s.
Mawhi, isi icm vs a api ubaiati
ma that a wi sha th ppuati (abit sti
cmpaativ sma) a puchasi whit s a
th hm appiacs. T iustat th sca th whit
s makt, pucti hush iats a
washi machis jump b m tha 440%, a 320%
spctiv btw 2002 a 2011.
Whi xpt ma has su i ct as u
t p cmic citis i k wst cutis,
pucti whit s i Chia has maa t
maitai hath wth, thaks t a sis avab
cmic picis auc b th Stat Cuci i at
2008. Spcica, th hush appiacs ta-i
a hm appiac i t th cutsi pams,
bth i pac btw 2009 t 2011, hp t bst
ma, spcia i ua aas. dspit ths stimuus
pams cia ishi at th ast a, th
hm-appiacs-subsi sstm has b xt i
sm pvics, which has s a hp t kp pucti
at simia vs t ast a. Hwv, whi Chis
ma m this sct is st t ctiu v th
tm, th i wakss i ma k xpt makts,
a with a is m ct i ta stcks, ps a
tmpa wsi isk t th sct i th a utu.
eswh, iastuctu cstucti, such as i
xpasi a aiwa ivstmt, has as ctibut
t wi siv ma. Withi th mstic Chis
makt, i cstucti has uubt a
cmic wth. I a, a siicat amut
pw is at i ca-ich is th cut,
ath tha aas that a cs t hih a cts. Th
tasmissi sstm iia cat was pa t
CHIneSe lIgHT VeHICle ProdUCTIon
V
ehicleproduction,
Index2001=100
Source: Thomson Reuters GFMS
0
200
400
600
800
1000
201120092007200520032001
CHIneSe WHITe goodS ProdUCTIon
Ve
hicle
production,
Index2001=100
Source: Thomson Reuters GFMS
0
100
200
300
400
500
600
700
201120092007200520032001
Refrigerator
Washing machine
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cv cticit v mat istacs. Hwv, as
cmic wth accat ivstmt i th atia
i ai t kp pac. As a sut, th mais
csiab scp wth i siv ma i this aa.
dma bai as a ss as civ
a bst wi th api vpmt i husi
cstucti i th sc ha th 2000s. nvthss,
as a stat pics su i ct as, this pmpt
as a pssib ppt makt bubb. This i tu has
sut i vmt ts t c th sct, icui
hih mta w-pamts a stictis
i t vps, which has impat a staii
ifuc pivat sct ivstmt. Psitiv, this has
b st, i pat, b st vmt spi
scia husi. This is a umb vpmt
bjctivs tai u th w Fiv ya Pa a, as a
sut, is xpct t ctiu t suppt th cstucti
sct v th cmi as.
oTHer APPlICATIonS
I tms ma siv us i th iustia
appicati, this has w v th ast 10 as, with
ma isi m 8.4 M (260 t) i 2002 t 18.7 (582 t)
i 2011.
Simia t th t s i ma ctica &
ctics a bai as & ss, wth i th
iustia aas was upi b th stth th
mauactui sct i Chia, its a sut bmi
mstic csumpti a sui xpt ma. I
paticua, it is t that siv us as a catast i
th pucti th xi (eo), us pimai t
puc m th c, has impv ct.
That sai, whi Chia ss a xpasi i th
c pats, th siv xi qui ths sits wi
ctiu t b iv m vsas suppis, a as
such wi tpica cut aaist Chis siv iustia
csumpti ath tha its abicati ma.
PhotograPhy
I kpi with ts i phtaphic ma swh,
Chis tak i this aa has wak ticab
v th past ca s. last a, th us siv i
phtaph is stimat t hav a t just 2.4 M
(74 t) at paki i 2004 at 6.1 M (190 t). I tms
th picipa aas siv-at ma, spit
th wi ppuait pht bks, w xpct t s a
uth ci i ma csum pap u t th
wi miac bth itt-bas pht-shai
a hm ik jt c piti. Hwv, aa wh
th taitia siv-bas tch is sti us is i th
mica sct. I act, th iust was iv a bst with
th itucti Chias 2009 hathca m pa,
which tat impvmts i w- ua pima
ca. Pat ths ms icu upati quipmt
at hathca aciitis a, as a sut, th was tab
wth i th ma cvtia x-a tchis
i ua aas. Hwv, a citis hav ctiu t
av iita quipmt, wh w ctiu t s a shit
awa m siv hai-bas sstms.
Whi th us siv-bai m i csum
appicatis is a cii t, th ma m
i th cmmcia sct appas t hav is mst
i ct as. Mv, ithaphic appicatis, us
wi i aphic ats a piti patis, mai a
aa vpmt with ma busisss ctiui
t apt siv hai tchis (i shap ctast t
wst makts) as th miati t iita is i a
a as bi t cst.
Fia, th Chis mti pictu iust has
xpic a pi api wth sic th vmt
ba asi uatis i 2001. I pat, th sct has
bt m th xpasi i th umb thats.
B th ast a th umb scs i citis
atiwi ha xc 9,200, whi th umb
cimas ach 2,800, u t th xpasi i w uba
cts acss th cut. Whi th vast majit ths
w istaatis bast iita tchis, it is stimat
that th m taitia siv hai m was ituc
it au 10% this tta.
CHIneSe PHoTogrAPHy deMAnd
0
1
2
3
4
5
6
7
8
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
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The Chinese silver markeT - DeCember 2012
Jewelry
Chis siv jw abicati has u a
siicat mtamphsis v th ast ca which has
vtua t th Asia iat bcmi th ws
ast abicat. l b a sui cm, which has
iv ava aua gdP wth v 10% v this
pi, mstic csumpti siv jw has is
shap. I aiti, Chis abicats hav as ivst
havi i tch t bui a hath xpt ta,
miati th w cst smt, as w pucti
csts hav pvi acia avata v ma
taitia ivas.
It shu b t that Thms ruts gFMS Chis
stimats bth jw a sivwa i 2011, a
i th back sis, hav b ais sic th
pubicati World Silver Survey 2012. Th cmmissii
this pjct has aw at cus th Chis
makt a w imati uath ui
sach visits this a has cssitat a thuh viw
u stimats a cacuatis. Th wi aasis is
bas ths vis umbs.
I 2001, Chis siv jw abicati tta 14.1
M (438 t). Csumpti was miat b a buk
taitia itms that w t basic i si a a
sv k cbatis ik a biths wis.
outsi ua is, siv was iitia t hih
a. Whi siv jw (a sivwa) has a
taiti i Chia, it has mai b i th p ua
aas th cut that siv has b puchas. Uba
Chis (spcia i st a sc ti citis) w
uctat t chs siv, pi a patium
jw v siv sis.
I th pi 2001- 2005, aua Chis siv jw
abicati wth ava a stai 21%. Th
abicati ct Pau i guahu pvic as
a sut w api as ma abicats (ma m
H K) mv thi patis t this ctai
mauactui hub. Csumpti was wi api,
athuh it was th xpsi i xpts that was th
mai ctibut t th is. F istac, xpts
siv jw t th Uit Stats (th ast csumi
makt) m tha ub ui this v a pi,
whi i ctast, shipmts t that cut m Ita
sipp b amst a thi.
Chis abicati ma ui 2006-2011 ctiu
t bui as a sut uth xpt ais a sta
wth withi th mstic makt, with aua wth
v th pi avai a hath 13%. I aiti,
Chis tak ctiu t bt m act
catis m iustiai cutis a icasi
m suthast Asia ihbs, attact b th w
ab a ppt csts. B 2006, xpts t th
Uit Stats ha pak (at m tha 15 as
uitupt wth) but th th sipp amst 30%
m this pit t ast as v, havi batt with
sui siv pics, cmptiti m th w cst
pucs, a phaps m imptat, a US cssi,
which saw csum spi a amatica. Hwv,
whi xpt ma was taki a hit, csumpti i
Chia was avaci api as csums (spcia th
uth maphic) w attact b th w t pit
cmpa t th isi cst bth a patium.
Accptac siv jw as a atativ t its m
xpsiv cusis was iitia imit t st a sc
ti Chis citis wh pmti was atst. yu
atis hav k t siv (mai hium
pat sis) as it pvi th k whit
patium at a a w pic pit. I th ast w as,
siv jw has j at xpsu acss th
cuts iti bsti th custm bas a xpsi
csums t th w cst atativ. Chis abicats
a upicati ppua sis ma u i 18-caat
whit i th m aab whit mta t attact
w bus.
Th upaa Chis cmic wth that has
stimuat ubaiati i th ast w as is ath
k as wh siv jw ma has ctiu t
sa at such a st at. I, isi icms vs
a a api xpasi tai utts acss th cut
hp xpai th a 17% aua wth witss i
CHIneSe SIlVer JeWelry FABrICATIon
0
10
20
30
40
50
60
201120092007200520032001
Source: Thomson Reuters GFMS
0
5
10
15
20
25
30
35
40
Millionounces
Annual growth in
jewelry demand
%
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The Chinese silver markeT - DeCember 2012
bth 2010 a 2011 as at xpsu t th mta
siicat bst csumpti.
lki aha, w xpct t s uth wth i
jw abicati vums i cmi as. oi
ubaiati shu u th xpasi tai utts a
it th xpsu siv as a ashi jw atativ.
Icas makti is ik t bui awass a w
xpct t s at mphasis pac up ba
pucts spcia i th a citis wh th uth
maphic a m ba cscius. eswh, wh
tast is t as , ma w pic ashi
jw shu ctiu t iv abicati vums
hih. Fia, xpt s a as ik t pickup with
th vtua cv wst cmis which i tu
shu iv uth ais i Chis jw abicati
sm tim t.
Silverware
Chis sivwa abicati has as xpa at a
bust at v th ast ca. At just 3.5 M (108 t) i
2001, ma has w at a aua ava at
11% i th ast 10 as, thb m tha ubi t a
stimat 8.3 M (259 t) ast a. This pacs Chia as
th sc ast sivwa abicat ba bhi
Iia.
This wth has cm at tim wh sivwa ma
ba has su m a pi tm stuctua
chas, with ba csumpti 48.5 M (1,510 t)
ast a amst 60% bw th 1997 pak. This scua
cha has a b a ucti scita chas
i Iia a a ui shit i puchasi habits i
wst makts. I Chia, hwv , abicati has
btt m isi mstic csumpti a its w
mauactui a ab csts which hav cua
i abicats i hih ab cst is (mai i
th iustiai w) t cat t Chia t ai this
avata. Ths i patships bst xpts
a ituc w tchis which hav s th
quait ish Chis pucts is siicat.
I th ast w as, ma i k wst makts
has c paticua shap cis as hih a
vati siv pics hav cmbi with th cssia
cmic citis t cutai isctia spi.
A t this has b a ctiuati scita ts,
such as csums th mvi awa m ma
ttaii a it ivi sivwa as a taitia
wi pst. Chis xpts sivwa hav b
a casuat ths wak makts with ict shipmts
m Chia a via H K (as th cuit mst us
t ship t itatia makts) cii as a sut.
nvthss, a spit th i eupa cmic
cisis, Chis sivwa abicati has maa t
bu st i th ast w as at si u
i 2008 a 2009 t c a hath ai i 2010 a
aai ast a, avai 10% wth ths as. This
psitiv utcm was i stak ctast t ba ma,
which tat 13% a 9% spctiv this pi.
Whi xpts hav pick up m ai ws it has b
th mstic makt that has iv ths vius
ais a is ik t pvi th patm utu wth.
dmstic sivwa csumpti was c pimai
iv b ma m ia Chia wh hav pai
taitia itms with cutua mtivs w t iv
at imptat ccasis (at a bith, xamp). Ths
as, hwv, csumpti is bi aumt b a
isi mi cass (a ucti th api avaci
cm) which i tu has t at ma
tabwa i uba hushs a siv itwa
which has w substatia as th cst itms has
is shap. This itwa smt th iust has
s api xpasi i th ast tw as a is xpct,
i u viw, t ctiu, ivi uth ais i 2012
a b. I, Thms ruts gFMS cast
that Chis sivwa abicati wi ist hath
ais sva as as a bust cmic vimt
stimuats mstic sas am a at ppti
th ppuati.
CHIneSe SIlVerWAre FABrICATIon
0
2
4
6
8
10
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
7/30/2019 The Chinese Silver Market 2012
22/26
22
The Chinese silver markeT - DeCember 2012
5. silver investment demand in China
Invstmnt man silv as pst a spctacla
incas in Cina in cnt yas. Fm a maginal play
jst a w yas ag, Cina as alay bcm t wls
laing makt bt pysical invstmnt an pap
taing silv ts an t simila cntacts.
Retail investment
T Cins tail invstmnt makt as bn
taitinally minat by ict pcass an sals
silv cins, wit invstmnt in pysical bas nly bcming
availabl in Jly 2009, wn stictins w lit by
t gvnmnt. Givn tat silv cins sl in Cina a
gnally cmmmativ in nat an t attact
a ig pmim, invstmnt man, altg n a ising
tn, as bn lativly mst v mc t 2000s.
As mntin abv, in Jly 2009, t cnty intc
its st v invstmnt pptnitis silv bllin
bas. Sinc tn, bas w intc in a vaity sizs,
anging m 200g, 500g, 1kg, 2kg tg t 5kg, ac
wit a pity t 9s, an all sbjct t 17% VAT.
T st ll ya at libalizatin t invstmnt
makt, nt man silv bas an cins m tan
bl, ttaling 9.8 Mz (305 t), qivalnt t almst
$200 millin. By 2011, ts a gs sa t 17.0 Mz
(530 t) an sm $600 millin spctivly. T pt tis int
a wi pspctiv, Cins invsts last ya accnt
8% glbal nt pcass silv bas an cins.
Mv, pctatins a tat t gwt is in t
piplin t yas t cm as lcal savs pt ti tst
in pcis mtals as a st val an infatin g.
Makt libalizatin was als accmpani by a massiv
spply si pansin in t Cins pcis mtals
makt, gl in paticla, wit silv bing a maj
bnciay. T nmb lcal banks activ in t
mstic makt climb m jst in 2005 t a
cnt ttal m tan 20. An, ac ts banks
as incas t nmb bancs tat bllin
pcts t t pblic. In aitin, jwly tails av
als vt an incasing amnt cnt spac t
s-call git bas tat a sl at ig pmim an in
sm cass av als bgn t sll lw-magin invstmnt
bas t ti cstms.
Nt spisingly, gwt in Cins silv invstmnt in
cnt yas can nly patly b plain by t spply
si acts. Citically, ts av bn spplmnt
by a maj ps m t man si. In st,
maccnmic cnitins in Cina an aba av
ncag an plsin in lcal pcass pcis
mtals. Fist, Cinas ig sl savings at mans
tat mstic invsts av a gat al cas tat
gntly ns t n a m. Scn, invstmnt ptins
a still at limit, in pat bcas still immat
mstic nancial makts bt als in n small mas
t stict ign cang cntls. Ti, m
cntly tw t mst av stinatins lcal
savings av bcm lss attactiv: T ppty makt
as bn vlatil an cntls av bn implmnt t
stain spclatin an t stck makt as sn avy
lsss. Ft, llwing t massiv liqiity injctins in
2009, t last tw yas saw infatin is t a wyingly
ig lvl vn n t cial mas tat sm bliv
was t cnsvativ. Fit, intst ats savs av
main lw an, in act, a cls t z in al tms.
An, nally, n sl nt nstimat t stimls
t invstmnt man givn by a ising tn in t
intnatinal lla pic silv, wic as nly sligtly
bn c by t yans gains in cnt yas against
t Amican cncy. Manwil, silvs impssiv
pic gains an its cap nit pic cmpa wit gl
pvi a t bst t invst cnnc.
Lking aa, it is pbabl tat pysical silv
invstmnt man will cntin t fis in Cina, at
last wil t cnitins scib abv main in plac,
wit tis sppt by t pansin n t spply
si tat will impv t availability bllin pcts
lcal invsts.
reTAIL INVeSTMeNT IN ChINA
0
3
6
9
12
15
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
Coins & Medals
Bars
7/30/2019 The Chinese Silver Market 2012
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The Chinese silver markeT - DeCember 2012
Commodity exChanges
Alng wit gwing pysical invstmnt man, intst
in pap pcts ta n mstic cangs as als
pan apily in cnt yas. At t mmnt, t a
t cangs tat silv taing in Cina.
ShANGhAI WhITe PLATINuM ANd SILVer exChANGe
Fllwing t libalizatin t silv makt in Cina,
t hatng Nns Mtal Wlsal Makt was
givn clsiv igts t ta an manag t pysical
silv makt in 2000. In 2003, t hatng cang was
sps by t Sangai Wit Platinm an Silv
ecang (WPSe), wit t latt tn bcming t nly
cially signat silv tansactin makt in Cina.
T at, t aily pic by t WPSe as alay
bcm a ky bncmak bys an slls silv
bllin in Cina. Altg pivat invsts can ta n
t WPSe via t cangs mmbs, inmatin
sggsts tat t vwlming majity tnv n t
cang as bn lat t cmmcial activitis. Tis
lagly plains t lativly mst gwt in tnv n
t WPSe in cnt yas, paticlaly cmpa wit t
Sangai Gl ecang (SGe) an t Sangai Fts
ecang (ShFe) w gwing invst intst as l
t a sg in silv taing vlms.
ShANGhAI GoLd exChANGe
on octb 30t 2006, t SGe lanc tw silv
cntacts, namly Ag999 pysical silv an Ag(T+d)
cntacts (ctivly a ts cntact). As can
b sn in t cat blw, taing n t SGe main
sb ntil mi-2010 wn silv pics stat t
climb matially ig. Ftm, wispa mia
cvag pcis mtals n stat n tlvisin,
ising awanss silv as an invstmnt tl amng
t gnal pblic an an incas in t nmb
cmmcial banks ing bkag svics w als
imptant t t psitiv tcm. In paticla, silvs
gat vlatility tan gl, bt its still cls clatin,
cmmn it t ts w ga silv as a m
lvag altnativ t gl.
As a slt, aily avag tnv jmp tnl m 2.1
Mz (66 t) in 2009 t 22.5 Mz (700t) in t nal qat
2010. As pics cntin t stngtn, tis sv
t inc pic pctatins, wic was fct in a
t lit in SGe taing in t st v mnts 2011.
By May last ya, aily silv ts tnv a, t
st tim, c 60 Mz (1,890 t). dspit a maj
all in taing vlm tat, invst intst as
main igtn ya-t-at by istical stanas.
Mv, as t silv pic stat t cv m lat
Agst nwas, t last w wks av sn a api pick
p in silv taing vlm n t SGe. Mving wa, as
t silv pic is pct t pst signicant gains v t
nt 12 mnts s, tis may wll stimlat ant wav
invst intst n t SGe.
ShANGhAI FuTure exChANGe
T ShFe lanc a silv cntact n May 10t tis
ya, wit a stana taing nit 15 kilgams/lt, a
aily pic limit 5% it si t pvis ays
sttlmnt pic an a minimm magin qimnt
7%. T st v mnts patin av pv
vy sccssl, as igligt by ttal taing vlms
17,436 Mz (542,306 t) tg t n-Nvmb.
Ftm, wit an avag aily tnv 123.7 Mz
(3,846 t), t ShFe as alay bcm an imptant
cmmity cang silv ts taing n a glbal
basis, nly at Cm. Lking aa, t pspct
t gwt in taing vlms n t ShFe mains
pmising, paticlaly i t cang cis t intc
a nigt taing sssin.
SGe TurNoVer ANd oPeN INTereST ShFe TurNoVer ANd oPeN INTereST
0
30
60
90
120
150
Jan-12Jan-11Jan-10Jan-09Jan-08Jan-07
Source: SGE
Openinterest(millionoun
ces)
0
20
40
60
80
100
120
Turnover(millionounces)
Open
Interest
0
50
100
150
200
250
300
350
400
OctSepAugJulJunMay-12
Source: SHFE
Openinterest(millionounc
es)
0
30
60
90
120
150
Turnover(millionounces)
Open
Interest
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24
The Chinese silver markeT - DeCember 2012
6. silver imports and exports
As silver recvered rm imprted ccetrates is
discssed i detail i Chapter 3 this reprt, this chapter
will ly address Chiese silver imprts ad eprts i the
rm blli ad semi maactred prdcts.
Bullion imports and Exports
Aalyzig Chias silver blli ws i the last decade
has bee made ar easier sice the liberalizati the
Chiese silver market at the begiig the 2000s whe
the gvermet eded its 50-year mply sales ad
prchases silver. This chage delivered a trasparecy
that previsly did t eist, with blli ws (bth
imprts ad eprts) te previsly paqe de t a lack
reliable data. Fr istace, i the late 1990s, fcial
metal ws were te accmpaied by sigifcat ws
fcial shipmets, which made btaiig a clear
pictre tre demad a difclt assigmet. There
remais a degree fcial ws tday, thgh these
have dimiished ver time.
As illstrated i the chart ppsite, Chiese silver blli
shipmets have bee dmiated by eprts r mre tha
a decade. The blk these eprts were recrded as
gig t Hg Kg, althgh mst this was destied
r re-eprt prpses, primarily t Idia ad ther
ctries i East Asia sch as Thailad, Idesia ad
Taiwa. Basis r calclati, fcial blli eprts
rse rm belw 64 Mz (2,000 t) i 2001 t a peak
ver 155 Mz (4,800 t) i 2006. Despite a sbstatial all
thereater, blli eprts remaied cmrtably abve 35
Mz (1,100 t) last year.
Iterestigly, while Chia was e the mst imprtat
silver blli eprters t the iteratial market
thrght the 2000s, fcial imprts silver remaied
a gig eatre the market ver the same perid,
albeit a limited magitde. This rather cris state
aairs was primarily related t qality isses. I may
cases, certai idstrial sers silver, especially reig
peratis with striget qality reqiremets, had t
brig metal i despite this beig mre epesive tha
srcig lcally i the ctry.
Lkig at the drivers behid the srge i eprts rm
2002 t 2006, this was iitially drive by the liberalizati
the Chiese silver market, as a grwig mber
dmestic cmpaies were give the licese t eprt silver
blli, thgh ttal vlmes were still cstraied by a
eprt qta issed by the Miistry Cmmerce that was
reviewed a aal basis. I 2000, r eample, ly
r eprters were grated eprt qtas ttalig 13.5
Mz (420 t). By 2005, this had grw t 128.6 Mz (4,000
t) via mre tha 40 eprters.
Frthermre, there is e imprtat allwace t make
whe assessig the large vlme Chiese silver eprts
i the middle part the 2000s. Chiese silver prdcers
ad traders hldig fcial eprt qtas at times ejyed
a 13% VAT rebate based the vale the silver eprted
as per the shippig dcmetati. This icetive was
eplited by etities that shipped silver t Hg Kg
i rder t claim the VAT red, ly r the silver t
the be smggled back t the mailad. This lphle
sigifcatly iated the tre eprt fgre r a mber
years i the mid-2000s. Fr istace, Thms Reters
GFMS estimate that as mch as 150-160 Mz (4,670
4,980 t) was ivlved i this activity which ths reslted
i a verstatig the tre size Chiese silver eprts
rm 2003 t 2008.
Ater the VAT rebate was redced rm 13% t 5% i Jly
2007 ad the was elimiated i Agst 2008, blli
ws rm Chia t Hg Kg drpped dramatically as
the icetive t rd trip the metal was largely remved.
Blli eprts, thereater, ell csiderably, as r
estimate shws that vlmes ttaled 37.9 Mz (1,178 t) last
year. Imprtatly, the demise the VAT scheme is t the
sle driver r the declie i eprts witessed i recet
years. Perhaps a greater actr has bee dmestic prices
persistet premim ver iteratial prices, which has
redced the icetive r idstry t eprt. Frthermre,
CHInESE BuLLIon IMPoRTS AnD ExPoRTS
0
30
60
90
120
150
180
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
Imports Exports
7/30/2019 The Chinese Silver Market 2012
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25
The Chinese silver markeT - DeCember 2012
a rapidly epadig dmestic market (r jewelry,
silverware, ivestmet ad idstrial demad) has limited
blli ws t the ctry.
Trig t this year, Chiese blli eprts have remaied
at lw levels year-t-date, as weaker silver prices,
particlarly cmpared with recrd highs i 2011, have
see may lcal silver prdcers relctat t sell their
silver blli. T ed-octber (latest data available) grss
eprts were dw by ver 30% year--year ad are likely
t be well belw 33 Mz (1,000 t) r the ll year.
sEmi-manufacturEd and industrial silvEr
shipmEnts.
Chiese imprts semi maactred silver have bee
icreasig ver the last te years as idstrial tpt has
ctied t epad. Demad r silver sed particlarly
i the area phtvltaics has see tremeds grwth
with a large prprti the silver pwder ad pastes
sed i this brgeig idstry beig imprted rm the
uS, Japa ad Taiwa. Reviewig the Chiese imprt
data cfrms this epasi, with silver pwder imprts
a decade ag still cmrtably belw 2.6 Mz (80 t)
( a calclated basis), gradally icreasig i the mid
2000s, ad the ballig t ver 19.3 Mz (600 t) i
2010 as abricatrs ramped p prdcti aggressively i
aticipati strg demad i 2011.
Hwever, abricati demad eased back slightly last year
(imprts pwder slipped t 14.2 Mz (433 t) ater the
glbal spply chai was verladed with ecess ivetry.
The verspply i the market cased a sharp drp i
mdle prices, which led t several high prfle casalties,
primarily Wester cmpaies that were able t cmpete
csts set by Chiese maactrers. Mrever, despite
sme attriti dmestically Chiese tpt accted r
almst 60% glbal slar cell prdcti last year.
Lkig t this year, silver demad r phtvltaic
abricati remais smewhat mribd, largely de t
the ecmic climate i the Erze, with demad r
fished mdles remaiig st. Dmestically, demad
has remaied rbst thgh the declie i eprts has
bee tellig, with imprts silver pwder rm uited
States (a gd pry r the stregth the idstry)
weaker by 38% t ed-octber (the latest available data).
Lkig briey at semi maactred eprts silver
(which ca take the rm wires, grales, silver plate ad
semi fished chai amg a myriad ther applicatis),
these have als icreased sbstatially ver the last
decade. Chiey de t the epasi the idstrial ad
jewelry trade (bth a cti the advacig ecmy
ad the massive ivestmet i these sectrs) eprts
related gds der this tari have rise i silver ctet
terms rm small levels i 2001 t ver 6.4 Mz (200 t) at
their peak i 2006 accrdig t available trade w data.
Sice the peak, eprts have tailed , with the glbal
ecmic slwdw ad assciated redcti i demad,
impactig abricati tpt. Eprts last year slipped
belw 1.9 Mz (60 t) a calclated basis ater hldig
steady ard 3.2 Mz (100 t) sice 2008.
CHInESE IMPoRTS oF SILVER PoWDER
0
5
10
15
20
201120092007200520032001
Millionounces
Source: Thomson Reuters GFMSSource: Thomson Reuters GFMS
7/30/2019 The Chinese Silver Market 2012
26/26
Thomson ReuTeRs GFms
30 st Clad
T T Rtr Bildig
Caary War
Ld, e14 5eP, uK
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The sILVeR InsTITuTe AnD Thomson ReuTeRs - DeCemBeR 2012
All rigt rrvd. Rpblicati r rditribti T silvr Ititt ad
T Rtr ctt, icldig by raig r iilar a, i pribitd
witt t prir writt ct T silvr Ititt ad T Rtr.
T Rtr ad t T Rtr lg ar tradark T
Rtr ad it afliatd cpai.
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