- January saw high silver sales from households in the West amid growing industrial demand in China
- China shipped large silver volumes to London while domestic stocks hit decade lows and refiners strained
- Solar manufacturing drives silver demand, using 196 million ounces in 2025, about 20% of the market
January turned out to be a very good time to sell that silver spoon - if you were ever lucky enough to be born with the real one. Pawn shops and jewellery stores felt like trading floors, as people sold silverware, coins and family heirlooms - objects meant to be passed down, not cashed in.
While this played out across North America and Europe, China was telling a very different story. It shipped unusually large volumes of silver to London last year, even as inventories on its domestic commodity exchanges fell to decade lows and refiners struggled to keep up with physical demand.
These two scenes - the household seller and the industrial buyer - might seem worlds apart. In reality, they are linked by a deeper shift in how silver is used, and why it's suddenly so valuable.
ALSO READ: Gold Reclaims $5,000, Silver Jumps 5% As US Supreme Court Strikes Down Trump Tariffs
Solar Powered the Silver's Renaissance
Silver's price rise is largely driven by solar manufacturing, which used about 196 million ounces in 2025 - equalling the jewellery demand and accounting for nearly a fifth of the market. Newer solar cell designs like TOPCon require more silver. That has increased silver demand despite ongoing efforts to reduce silver use per watt. While efficiency improvements and alternative materials help, rapid growth in solar installations continues to push demand higher.
According to the International Energy Agency, we need 630 gigawatts of panels to be installed every year between 2030 and 2050 to hit net-zero targets. However, experts believe that China's solar installations may have peaked. But EVs, grids, and AI data centres need more and more silver at a time when the primary silver mine output continues to fall. Rising demand and declining supply have led to persistent deficits, suggesting prices will remain elevated.
ALSO READ: Frenetic Activity In Silver May Be Over For Now
China's Central Role
Over the past fifteen years, China has moved to the centre of the global silver market. It became the world's second-largest silver fabricator as early as 2011 and drove much of the growth in industrial demand again in 2024. Because China dominates solar panel manufacturing, its industrial policy feeds directly into global silver prices. Large, state-backed solar expansions consume vast amounts of silver each year, and newer cell technologies tend to use more of the metal.
China also plays a decisive role on the supply side. It is a major processor of silver ores and tightly controls exports. From January this year, China made silver exports more restrictive through tighter licensing rules, pushing prices higher as industries rushed to buy more.
The Shanghai Futures Exchange (SHFE) has become a key signal for the physical market, with inventories falling rapidly and signalling tight physical supply. However, Chinese manufacturers are now speeding up substitution and cutting silver use wherever they can.
Recent trading shows that physical shortages, not speculation, are driving silver prices. Global prices have calmed, but supplies in China remain tight as industrial users and investors keep pulling metal out of inventories. Speculative heat has also faded as open interest on SHFE is falling. However, the physical squeeze hasn't eased. In such situations, it is the availability of physical metal-not paper or digital contracts-that ultimately sets the price.
ALSO READ: How 2026 Looks For Precious Metals And What Should Investors Do Next?
The Road Ahead
Silver's future comes down to a race between how fast industry learns to use less silver and how fast the world keeps electrifying. In one path, manufacturers win that race. Solar companies keep cutting the amount of silver used in each panel, copper replaces silver in many applications, and high prices encourage people to sell old jewellery, silverware and coins.
In that world, the pressure eases. Prices come off from today's extremes. In the other path, demand outruns efficiency. Solar installations keep surprising on the upside, while demand from newer technologies and use cases never ends. In that world, prices don't need to spike endlessly - but they stay structurally high, with only brief pullbacks when speculation fades.
Either way, China sits firmly at the centre of the equation. It drives demand through massive solar installations and manufacturing scale, while simultaneously pushing efficiency and substitution. At the same time, it influences supply by controlling exports and dominating silver processing and trade flows.
Geopolitics adds another layer of uncertainty. Hopes that a Trump-Xi meeting in April could ease trade frictions and improve supply flows have already contributed to this year's price pullback. But broader geopolitical risks from trade policy to energy security remain elevated, keeping a risk premium embedded in silver prices. Once again, China's role is decisive.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.