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BEIJING, Dec 5: China is the most important emerging market for silver, with the potential to rival the United States and Japan in industrial and jewelry fabrication, according to a report issued by The Silver Institute.
A Review of the Chinese Silver Market noted that China's share of the world's silver fabrication has grown from around 3 per cent a decade ago to over 6 per cent in 2004, the report, prepared by the consultancy firm GFMS Ltd., stated.
Currently, China is the world's fourth largest silver miner with 63.8 million ounces in 2004. One of the biggest changes on the supply side in recent years has been the major increase in the amount of silver recovered from imported base metals concentrates.
During the early-to mid-1990s, silver supply from such sources was insignificant but, by 2004, the volumes recovered were equivalent to half the country's domestic mine production.
The report put a particular emphasis on the role of scrap supply, focusing on photographic and electronics uses. GFMS concluded that "control and distortion of the silver market by authorities has adulterated the official data on scrap supply," making it difficult to construct historical data.
However, the report noted that scrap supply clearly has risen sharply over the past 10 years.
As for silver stocks, the report noted that although official or quasi-official stocks currently exist, levels are significantly lower than in the mid-1990s.
"More open to debate is, of course, the question of the actual magnitude of this destocking (and consequently how much bullion may still be held by the Chinese)."
Currently, China has an essentially free silver market. Nonetheless, some indirect barriers are maintained, mainly through the special tax treatment of silver and restrictions on activity in the country's two silver exchanges. — Internet
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