Market Research Report On China's silver Industry in 2006

Market Research Report On China's silver Industry in 2006

Published:Feb 6th 2007


Introduction

Since 2003 international silver market have become stronger and stronger. In 2005 annual average knockdown price of silver in international market (LBMA), which is valued by US dollar, reached US$7.3164 dollar/ounce.
2006 is the year which saw the rise and fall in international silver market. Promoted by bull market of base metal and price of gold and affected by wrinkles such as release of ETF, increase of industrial use silver and weakness of dollar, price of silver has increased stably, exceeding US$14.94 dollar/ounce in the end of the year from US$ 9.15 dollar/ounce in January. Mean annual knockdown price reached US$ 11.5452 dollar/ounce, increasing by 57.8% compared with that in 2005. The highest price of the year was US$ 14.94 dollar/ounce.
Since January 1st, 2001 when China cancelled planned purchase and supply of silver, silver industry has gained rapid development. Output, consumption volume and import and export volume all have increased a lot.
In 2006 domestic price of spot silver kept in step with international price. The mean annual price in the principal trade region¡ªshanghai, was 3265 RMB/kg, increasing by 54% compared with 2120 RMB/kg in 2005.
Silver export trade has increased year by year. At present export of silver raw material carries out state trade export quotas managerial system and export quotas are increasing year by year. Export quotas in 2004, 2005 and 2006 were 3050 tons, 3500 tons and 4000 tons respectively. China has become one of the most important silver suppliers in the world.
At present Chinese government is attracting foreign capital to invest in China's mining industry, which makes more and more foreign capital invest in china's silver industry. In addition, the government also encourages Chinese enterprises to step out of China and open up overseas resources. As more and more domestic silver enterprises take part in international competition, it will have significant impact on supply-demand relation of silver international market.
On October 30th, 2006, on the occasion of fourth anniversary of opening of Shanghai gold exchange, it started the third precious metal trade¡ªsilver trade, following gold and platinum. There are two products: spot Ag99.9 and delayed delivery of Ag (T+D).
These two products have increased domestic silver trade varieties; what is more important, delayed delivery of Ag (T+D) has opened up a new channel of investment and hedge for domestic silver market. Gold exchange will become an important place for China's silver investment.

Table of contents

Chapter 1. Overview of silver industry 6
1.1. Reserves and output of global silver 6
1.1.1. Reserves of global silver 6
1.1.2. Output of global silver 7
1.1.3. Production of global recycled silver 11
1.1.4. World major silver-producing companies and output of mines 11
1.2. Reserves and output of China's silver 12
1.3. Demand and purpose of silver 14
1.4. Current status of China's silver market 15
1.5. Future development trend of China's silver industry 16

Chapter 2. Policy environment and problems of development of China's silver industry 17
2.1. Laws and policies (see in appendix) 17
2.2. Problems and countermeasure advice in China's silver industry 17
2.2.1. Analysis on advantages and disadvantages of development of China's silver industry 17
2.2.2. Countermeasure advice 20
2.3. Impact on China's silver jewels industry by opening of silver policy 21

Chapter 3. General situation of global silver market 26
3.1. Review of international silver market in recent years 26
3.2. Price trend of silver in 2006 31
3.3. Analysis on fundamental situation of silver market 33
3.3.1. Supply of silver 33
3.3.2. Demand of silver 34
3.4. Major silver markets in the world 36
3.4.1. The America: COMEX and CBOT 36
3.4.2. The America: American stock exchange silver ETF 38
3.4.3. Britain: LBM 39
3.4.4. Hong Kong: gold and silver trade mart 39
3.4.5. China: Huatong platinum-silver and gold exchange 40
3.5. Analysis on market behavior of silver in 2007 40
3.5.1. Forecast on price by international institutions 40
3.5.2. Prospect of silver market in 2007 42

Chapter 4. Situation of China's silver market 43
4.1. Status of China's silver market in the global silver market 43
4.2. Review and Analysis of domestic silver market 43
4.2.1. Review of domestic silver market in 2005 44
4.2.2. Silver market price in 2006 46
4.3. Analysis on supply and demand of domestic silver 47
4.3.1. Production and supply of silver in China 48
4.3.2. Consumption of silver in China 52
4.3.3. Foreign trade import and export 53
4.3.4. Analysis on apparent co-ordination of supply and demand 56
4.4. Prospect of China's silver market 56
4.5. Analysis on advantages and disadvantages of basic product pattern of silver 57
4.5.1. Production status and prospect of silver powder home and abroad 57
4.5.2. Production status and prospect of silver sizing agent 58
4.5.3. Production status and prospect of traditional silver photosensitive materials 60

Chapter 5. Development strategy and measures of China's silver industry 62
5.1. Strategic orientation of China's silver industry 62
5.1.1. Collectivization management is the only way 62
5.1.2. Combination of two markets and two resources is the key to the realization of sustainable development 63
5.2. Opportunity for development of China's silver industry 65
5.3. Measures taken by China's silver industry to promote competitive strength 66
5.3.1. Orient to consumption and develop new products 66
5.3.2. Improve technology and promote quality of products 68
5.3.3. Change ideas and cultivate consumption taste of silver 69
5.3.4. Increase labor capacity and reduce production costs 70
5.3.5. Introduce within China and contact abroad and develop silver mine resources in China 71

Chapter 6. Analysis on investment strategy in silver 73
6.1. Current situation of investment in silver 73
6.1.1. Plate effect of commodity 73
6.1.2. Allocation of fund assets 74
6.2. Comparison of tools for investment in silver 75
6.2.1. Analysis on advantages and disadvantages of different tools for investment in silver 75
6.2.2. Available ways of investment in silver for domestic investors 76
6.3. Trade of Ag (T+D) in Shanghai gold exchange 77
6.4. China's silver industry is brewing a new round of investment opportunity 78
6.5. Wrinkles for investing in silver market 79
6.5.1. Optimistic international economic future 79
6.5.2. Hedge and value-maintenance of silver 79
6.5.3. Favorable support of fundamental situation 79
6.5.4. Increase of demand for investment 80
6.6. Risk factors of investing in silver market 80
6.6.1. Game playing between organizations and private investors 80
6.6.2. Upheaval factors of price 80
6.6.3. Price ratio between silver and gold 80
Tables 82
Figures 82
Appendix 84
Appendix I Regulations of the People's Republic of China on the control of gold and silver 84
Appendix II The mineral resources law of the People's Republic of China (amended act) 88

Appendix III Quality standard of silver in China and abroad 96
Appendix IV Relevant policies of silver trade and import and export 97
Appendix V Qualification standard of the state-owned trade export enterprises of silver in 2007 101
Appendix VI The list of the state-owned trade export enterprises of silver in 2007 102

List of tables
Table 1. Reserves of silver resources of major silver-producing countries in the world 6
Table 2. Output of silver in different mines in the world 7
Table 3. Output of major silver-producing countries in the world in 2005 10
Table 4. Output of world 20 large silver producers in 2004 and 2005 and forecast on output in 2006 11
Table 5. Output of silver in major dependent mines in the world 11
Table 6. SWOT analysis sheet of China's silver industry 19
Table 7. Table of co-ordination of supply and demand of global silver (million ounces), 1995-2005 26
Table 8. Monthly average price of silver in international market, January-December, 2004 (US cent/ounce) 29
Table 9. Monthly average price of silver in international market, January-December, 2005 (US cent/ounce) 29
Table 10. Monthly average price of silver in international market, January-December, 2006 (US cent/ounce) 31
Table 11. CBOT silver futures contract 37
Table 12. List of global gold ETFs 38
Table 13. Forecast on price of silver in 2007 by 25 organizations 40
Table 14. Statistics of price of silver in domestic market in 2005 (RMB/kg) 45
Table 15. Statistics of price of silver in domestic market in 2006 (RMB/kg) 47
Table 16. Output of silver by province, 2005 48
Table 17. Statistics of lead, zinc, copper and gold in China in recent years (unit: 0.01 million tons; gold unit: ton) 50
Table 18. Top 10 output of silver enterprises in China, 2005 (kg) 50
Table 19. Statistics of output of silver in recent four years in China (unit: ton) 50
Table 20. Analysis and calculation of domestic silver consumption in recent years (ton) 52
Table 21. Import and export of China's silver and silver products in 2005 (ton) 54
Table 22. Import and export of China's silver, January-November, 2006 55
Table 23. Apparent consumption of China's silver (sycee) in 2005 (ton) 56
Table 24. Domestic statistics of apparent consumption and co-ordination of supply and demand of China's silver (unit: ton) 56
Table 25. Effect on silver photosensitive material by digital video products 60
Table 26. Comparison of different tools for investment in silver 75

List of figures
Figure 1. Supply volume of global silver, 1995-2005 27
Figure 2. Distribution map of demand in silver manufacturing, 1995-2005 27
Figure 3. Trend of monthly average price of global silver, January, 1996-December, 2006 28
Figure 4. Trend of price of global silver in 2005 30
Figure 5. Trend of price of global silver in 2006 32
Figure 6. Comparison of price between base metal, gold and silver in 2006 32
Figure 7. Supply volume of global silver, 1995-2005 33
Figure 8. Forecast on supply of global silver in 2006 34
Figure 9. Demand volume of global silver, 1995-2005 34
Figure 10. Forecast on supply of global silver in 2006 36
Figure 11. Trend of price of domestic silver in 2005 44
Figure 12. Trend of price of domestic silver in 2005 45
Figure 13. Trend of price of domestic silver in 2006 46
Figure 14. Major silver-producing provinces in China 48
Figure 15. Analysis on structure of silver consumption in China 52
Figure 16. Net export volume of China's silver 54
Figure 17. Increase of commodity index fund 75

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