Why silver costs more in Shanghai

What the premium measures

The Shanghai Gold Exchange (SGE) quotes silver in yuan per kilogram. To compare it with London, convert it to dollars per troy ounce: divide by the USD/CNY rate and then by 32.1507. The premium is how far that number sits above (or below) London spot.

Today: ¥14,890 ÷ ¥6.7119 ÷ 32.1507 = $69.00 per oz vs $59.43 in London → +16.1%

The VAT mistake

China charges 13% VAT on silver, and a lot of commentary subtracts it from the premium, concluding that Shanghai is really at a discount. That is wrong for the headline SGE price: like London spot, it is quoted before VAT. The tax applies when metal is withdrawn from the exchange for use or sold on to a customer. The premium is therefore already a clean comparison between two pre-tax prices.

VAT does matter for a Chinese factory or investor taking delivery: with licence costs, freight and insurance, the all-in cost of bringing silver into use in China is well above the pre-VAT global price.

Why the gap exists

• Import licences. Only authorised banks and firms can import silver into China, so supply can't respond immediately to a jump in local demand.
• Industrial demand. China is the world's largest user of silver for solar panels and electronics. Heavy factory buying lifts domestic prices.
• Speculation. The Shanghai Futures Exchange has a large base of retail and institutional traders; strong buying there can pull SGE prices up with it.

Why it matters outside China

When Shanghai pays more than London for a sustained period, it becomes profitable to ship metal into China. That draws down stocks elsewhere, which can support prices in London and New York. A shrinking premium, or a discount, points the other way. That is why traders watch the premium alongside COMEX and London prices every day.

Follow it live

Our premium tracker updates the SGE and SHFE spreads against London and COMEX every few minutes while the Shanghai exchanges trade.