Silver does not blacken in warehouses – Kommersant

Polymetal boosted silver sales in the first quarter after being forced to stockpile bullion last year due to sales problems amid sanctions. Before the ban on Russian precious metals, Europe was the main market for Russian silver. Now the company’s management says that it sells almost all of the mined metals within Russia. Other silver companies are trying to organize ore refining in Kazakhstan to avoid discounts on bullion exports.

The largest Russian silver producer and the second largest gold producer Polymetal in the first quarter of 2023 increased its silver sales by 48%, to 6.4 million ounces, compared to the same period last year. Production of this metal decreased by 13% to 3.9 million ounces.

The company is actively sells out accumulated reserves. Last June, Polymetal informed on the accumulation of silver bars due to the lack of reliable export channels and sales opportunities in the domestic market. At the same time, the company negotiated deliveries with international commercial and industrial structures.

Problems with the sale of silver began after the EU in early April banned the import of Russian metal. The United Kingdom introduced a similar ban. Before the sanctions, Europe was the main market for the company’s silver. According to the Federal Customs Service, in 2021 Russia supplied silver from European countries to the UK (263 tons) and Switzerland (102.42 tons), while Polymetal produced 20.4 million troy ounces of silver (634.4 tons).

During a briefing for investors and analysts on May 10, Vitaly Nesis, head of Polymetal, said that the company now sells most of the bars on the domestic market to the jewelry sector and private investors.

According to him, the discount to world prices for such sales is less than 1%, although earlier in 2022 it was several times higher. A spokesman for the company declined to comment in detail on which consumers in the domestic market increased purchases so sharply. Last year, silver bullion, along with gold, became for many investors an alternative to deposits in dollars and euros, which have become less popular due to sanctions on Russian banks and financial infrastructure.

Other silver producers are tackling the marketing problem differently. Specializing in silver projects in Russia, Silver Bear Resources (SBR) sold all of its metal to Sberbank in 2021, according to the annual report of the miner. At the end of 2022, the list of largest counterparties has changed: now Sberbank accounts for 48% of the company’s revenue, and 46% is occupied by Trismegist and Solfer, trading in non-ferrous metals or their ores. Trismegista’s RAS reporting states that it exported silver ore to Kazakhstan to Kazzinc LLP, which processes ore into ingots. The metal produced by Kazzinc is listed on the Good Delivery register of the London Precious Metals Exchange, unlike Russian refineries, which were deprived of this status after the outbreak of the conflict in Ukraine. Bars without such status are bought at a discount.

Demand for silver is growing from the microelectronics industry, which is reviving after the covid years, says Sergey Grishunin from the NRA.

At the same time, there is a depression in commodity prices associated with expectations of a recession in the world against the backdrop of problems in the US banking sector. According to the analyst, silver prices have already shown a noticeable increase, and the traditional indicator in the form of the ratio of gold and silver prices has decreased to 75x. Usually silver is considered undervalued if this figure is above the 80s, Sergei Grishunin emphasizes. In his opinion, one cannot count on a significant increase in prices over the next six to nine months.

Evgeny Zainullin