China's New Export Policies Boost Silver's Strategic Metal Status

Under pressure: Silver supply deficit faces further stress

The Investing News Network (INN) reached out to Rich Checkan, president and COO of Asset Strategies International, to get his take on how China’s export restrictions could shake up the silver market’s fundamentals.

“Prior to the introduction of the new export requirements, supply of physical silver was already tight,” said Checkan in a January 6 email. "Last year was the fifth straight year of deficit production, bringing the physical silver deficit to just under a quarter of a billion ounces ... 230 million to be exact.”

Silver’s entrenched supply-side challenges are the product of several factors, he explained.

One is increasing demand for silver in the energy sector, whether from artificial intelligence data centers or cleantech applications, such as solar panels and electric vehicles.

That reality has merged with declining mine supply — it takes around a decade to bring a new silver discovery through to production, making it difficult to meet rising demand.

“Couple that with the fact that export restrictions (80 ton minimum of production, increased capital requirements, etc.) will take a significant portion of Chinese silver producers out of the mix for potential silver exports, and you get an immediate and significant supply stressor,” added Checkan.

Under China’s silver export restrictions, only 44 companies are licensed to send their silver to the global market.

“Economies dependent on imports of refined silver, especially in North America and Europe, face the risk of higher costs, logistical delays and the need to diversify suppliers,” said Antonio Di Giacomo, senior market analyst at XS.com, in a prepared report for INN. “These tensions could gradually translate into higher-end prices across the technology, energy and manufacturing sectors.”

Silver gains strategic metal status

China’s silver export restrictions are considered part of a broader trend of governments around the world tightening control over natural resources considered critical to industry and national security.

“From a strategic perspective, the decision seeks to ensure domestic silver supply for sectors considered priorities within China’s growth model,” Di Giacomo explained to INN.

“The energy transition, the expansion of the solar industry, the development of electric vehicles and advances in high-precision electronics have steadily increased domestic demand for the metal.”

By placing silver under a strict state-controlled licensing system with designating approved exporters, the Chinese government is treating the metal in much the same vein as rare earths. Controlling supply of both commodities not only addresses its national economic goals, but also helps to control global markets as well.

The US also elevated silver to strategic metal status in November with its inclusion on its US Geological Survey's critical minerals list due to its important role in building out advanced energy and defense technologies.

Silver’s inclusion on the list makes it a potential subject for a future Section 232 investigation — a formal process conducted by the Department of Commerce to determine if imports of certain products or materials are harming national security. The result of such proceedings could result in tariffs on silver.

What China’s silver restrictions mean for the market

It’s too early to determine the full impact of China's new silver export restrictions, but there is potential for much tighter global supply, which could translate to increased price volatility for the white metal.

“The new regulatory framework limits exports exclusively to a small group of companies previously authorized by Chinese authorities. In practice, this scheme directly reduces the volume of silver available to international markets, as not all refining companies can obtain export permits,” wrote Di Giacomo.

“The importance of this measure is amplified by China’s dominant role in silver refining and processing, which gives it structural influence over global supply," he added.

That’s because China holds a very prominent position in the global silver market. The Asian nation is the world’s second largest silver producer, producing 3,300 metric tons of the metal in 2024.

It also hosts the third largest silver reserves at 70,000 metric tons.

China’s largest primary silver-producing operation is Silvercorp Metals' (TSX:SVM,NYSEAMERICAN:SVM) Ying mine in Henan province, which yielded approximately 6.43 million ounces of silver in the company's 2025 fiscal year. The asset has a mine life that is expected to last through 2037.

Although China follows Mexico in global silver production, it leads the world in globally traded refined silver, accounting for roughly 70 percent of the market. Silver exports out of China in 2024 reached a whopping US$3.8 billion.

China’s export curbs are sparking concerns about supply chain disruptions and higher costs for solar panels, electric vehicles and electronics makers worldwide. Commodities analyst Anton Kharitonov sees the potential for the silver price to rise as much as 30 percent over the next 12 months “if China applies these export rules strictly."

“Looking ahead to the coming quarters, the silver market may operate under conditions of greater structural rigidity. If industrial demand maintains its growth pace and restrictions remain in place, any additional disruption to global supply could amplify price movements,” said XS.com's Di Giacomo.

China’s silver export restrictions also have the potential to further widen the growing disconnect between silver prices in the physical and paper markets. Premiums are especially high in Asia and the Middle East.

For example, analyst Stjepan Kalinic wrote on January 5 that the heaviest‑traded Comex March 2026 contract closed on January 2 at US$72.265, while in Dubai the lowest price for a 1 ounce silver coin was US$99.93.

“There is no doubt that the bifurcation between the paper silver market and the physical silver market will be expanded. Currently, the ratio of paper silver contracts to real, physical ounces of silver is 356 to one,” Checkan told INN. “That’s an inordinate amount of paper promises for every physical ounce of silver backing it.”