Silver miners are turning away orders from India, China and the Middle East. Futures fell 4% as margin calls swept commodities after Brent crude surged above $98 a barrel.
Silver miners are telling clients they can no longer satisfy demand from India, China, Saudi Arabia and Kuwait, according to an interview with one of the world's largest producers published Tuesday. The admission comes as the metal tests a multi-decade support level on the monthly chart, near $28 an ounce, where it has bounced repeatedly over the past 25 years.
One European refiner told buyers it has stopped accepting new orders for silver bars and coins from Asian clients, citing "unprecedented demand" from Middle Eastern sovereign wealth funds. Existing orders for delivery to Saudi Arabia and Kuwait are running six weeks behind schedule, the refiner said in a note to customers.
The supply constraint is showing up in physical premiums. London vaults are charging $1.20 over spot for 1,000-ounce bars, up from $0.40 a month ago. COMEX silver inventories have fallen for seven straight weeks, dropping 18% since April to 278 million ounces, the lowest since August.
Indian silver imports in May hit 1,200 tonnes, the highest in nine months, customs data show. At that pace, annual imports would exceed 14,000 tonnes, roughly matching the country's entire domestic mine output. Chinese imports rose 34% year-over-year in the first four months of 2026, driven by solar panel manufacturers.
The physical squeeze has not yet translated into higher futures prices. Silver fell 4.2% on Tuesday, breaking below $28 for the first time since March, as margin calls swept the commodities complex after Brent crude surged above $98 a barrel. More than 1,200 COMEX contracts of the July delivery were liquidated in the final hour of trading, the biggest single-session drop in open interest since November.
The divergence between paper and physical markets is widening. The ratio of COMEX paper volume to physical delivery stands above 250:1, near levels seen during the 2021 silver squeeze, when the metal rallied 15% in a week before collapsing 20% after the exchange raised margin requirements.
Silver mining stocks fell in sympathy. Wheaton Precious Metals dropped 3.8%. Pan American Silver lost 4.1%. The GDXJ junior gold miners index fell 2.9%, its worst session in three weeks.
A sustained dollar rally or stronger industrial production data could draw buyers back into futures, traders said. The next test is the Federal Reserve's June industrial production report on July 19, which will show whether the factory slowdown that has weighed on silver demand is deepening or stabilizing.
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