Chinese warehouse inventories of Silver dropped to their lowest since 2015, driven by record exports and physical tightness, pushing the Shanghai market into backwardation, ING's commodity experts Ewa Manthey and Warren Patterson note.

Exports surge to record 660 tonnes in October

"The global Silver market faces renewed supply concerns amid a drop in Chinese inventories to their lowest level in 10 years. Official data show Silver on-warrant stocks at Shanghai Futures Exchange warehouses fell by 9,361 kilograms to 531,211 kilograms as of yesterday -- the lowest since 2015."

"The sharp decline reflects large shipments to London, aimed at easing a squeeze that recently pushed prices to record highs. This drawdown follows a surge in Chinese Silver exports, which jumped to over 660 tonnes in October, marking an all-time high."

"Meanwhile, the Shanghai market moved into backwardation, with near-term Silver prices trading above later-dated contracts, signalling short-term physical tightness in China."