China’s new limit on silver exports has caused tremors across the market. According to reports, China has announced that silver exports will be restricted starting in 2026, and businesses will be required to apply for export licenses. This policy will be in effect until 2027.
Even Elon Musk expressed concern about supply threats related to China. Musk on X said, “This is not good. Silver is needed in many industrial processes.”
Silver was already experiencing supply shortages, and now, with China restricting silver exports, the volatility in prices is expected to increase. Silver price has moved up over 160% so far this year and trades around $76, after climbing to an all-time high of $81. On December 29, Silver prices dropped over 6% from the previous day’s close, likely due to profit-booking pressures.
Silver Market
Nearly 65% of the global silver supply comes from China. If China imposes restrictions on exports, global supply chains are bound to be impacted. According to the Silver Institute, Silver has experienced a continuous structural deficit for five consecutive years, indicating that the demand for silver has consistently exceeded its supply during this period.
China’s New Rule
From January 1, 2026, silver exporters in China will need to secure government licenses, a requirement that will only be granted to large, state-sanctioned firms that meet stringent production and financial criteria. This policy is expected to exclude smaller exporters and restrict the availability of Chinese silver in international markets.
Silver’s Industrial Use
China is the world’s leading market for both physical investment and paper trading of silver futures and other similar products, and is the second largest silver fabricator.
Silver plays a crucial role across various industrial processes, particularly due to its exceptional conductivity and reliability. This metal is essential for electronics, power transmission, and renewable technologies, making it a key material in modern industries.
Musk’s comment on Silver is also contextual, as companies like Tesla and the wider EV and renewable energy sectors will be highly affected by prolonged rises in silver prices. Electric vehicles require significantly more silver than internal combustion engine vehicles for components such as power electronics, inverters, high-voltage contacts, and fast-charging systems.